Life expectancy at birth is not a predictor of health care efficiency…

This is going to be a short post to argue that pundits (and some economists) need to stop quoting life expectancy figures to argue for/against a particular health care system. This belief is best exemplified in a recent paper in the Journal of the American Medical Association where Papanicolas et al. (2018)  point out that the United States “spent nearly twice as much as 10 high-income countries (…) and performed less well on many population health outcomes”. While the authors make good points about administrative costs, they point out that the US has a low level of life expectancy.

Sure, that is actually true – but Americans tend to die in greater proportions from homicides, drug overdoses and car accidents (Americans drive more than Europeans) than in other rich countries. While these factors of mortality are tragic (except car accidents since Americans seem to prefer the benefits of mobility to the safety of not driving), they are in no way related to the efficiency of health care provision. How much of a deal are these in explaining differences with other industrialized countries? A pretty big deal.  For example, these three factors alone account for 64% of the male life expectancy gap between Austria and the United States (see table reproduced below). For women, 26% of the gap between Austria and the United States is explained by these three factors.

The study I cite here only includes three factors. If you add in other factors like drownings among youths (Americans tend to have more drownings than several industrialized countries) which is a result of the fact that Americans are richer and can afford pools (while Europeans tend not to), then you keep explaining away the difference.  This is not to say that American health care is great. However, this says that American health care is not as bad as life expectancy outcomes suggest.

Mortality

 

Do risk preferences account for 1.4 percentage points of the gender pay gap?

A few days ago, this study of gender pay differences for Uber drivers came out. The key finding, that women earned 7% less than men, was stunning because Uber uses a gender-blind algorithm. The figure below was the most interesting one from the study as it summarized the differences in pay quite well.

DataUber

To explain this, the authors highlight a few explanations borne out by the data: men drive faster allowing them to have more clients; men have spent more time working for Uber and have more experience that may be unobserved; choices of where and when to drive matters. It is this latter point that I find fascinating because it speaks to an issue that I keep underlining regarding pay gaps when I teach.

For reasons that may be sociological or biological (I am agnostic on that), men tend to occupy jobs that have high rates of occupational mortality (see notably this British study on the topic) in the forms of accidents (think construction, firemen) or diseases (think miners and trashmen). They also tend to take the jobs in further removed areas in order to gain access to a distance premium (which is a form of risk in the sense that it affects  family life etc.). The premiums to taking risky jobs are well documented (see notably the work of Kip Viscusi who measured the wage premium accruing to workers who were employed in bars where smoking was permitted). If these premiums are non-negligible but tend to be preferred by men (who are willing to incur the risk to be injured or fall sick), then risk preferences matter to the gender wage gap.

However, there are hard to properly measure in order to assess the share of the wage gap truly explained by discrimination. Here with the case of Uber, we can get an idea of the amplitude of the differences. Male Uber drivers prefer riskier hours (more risks of having an inebriated and potentially aggressive client), riskier places (high traffic with more risks of accidents) and riskier behavior (driving faster to get more clients per hour).  The return to taking these risks is greater earnings. According to the study, 20% of the gap stems from this series of choices or roughly 1.4 percentage points.

I think that this is significantly large to warrant further consideration in the future in the debate. More often than not, the emphasis is on education, experience, marital status, and industry codes (NAICS code) to explain wage differences. The use of industry codes has never convinced me. There is wide variance within industries regarding work accidents and diseases. The NAICS codes industries by wide sectors and then by sub-sectors of activities (see for example the six-digits codes to agriculture, forestry, fishing and hunting here). This does not allow to take account of the risks associated with a job. There are a few study that try to account for this problem, but there are … well … few in numbers. And rarely are they considered in public discussions.

Here, the Uber case shows the necessity to bring back this subtopic in order to properly explain the wage gap.

RIP John Perry Barlow – On the right to free information

Sadly, John Perry Barlow, the founder of the Electronic Frontier Foundation has died today. He was – to me – a huge inspiration for the internet anarchy and the cyberlibertarian movement I support.

His vision of the internet was to create “a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.”

As a tribute to Barlow, I would like to provide a summary of his speech on The Right To Know at TEDx Marin.

  1. The first time Barlow got online, he thought the internet would create the collective organism of mind.
  2. He believed that one day everyone on the planet would be endowed with the right to say whatever they want to say within their hearts, and nobody would be in the position to shut them up. In addition, everybody would have the right to not listen to what was said or written on the internet.
  3. The internet was going to be the great challenger of dogmatism.
  4. Having founded the Electronic Frontier Foundation in July 1990, he spent many years thinking about the intersection between Cyberspace and the physical world.
  5. All the existing power relations in the physical are being renegotiated in Cyberspace.
  6. We are now at the point where the physical world is starting to become terrified of Cyberspace. This is obviously shown by how governments deal with Wikileaks and the Arab awakening.
  7. Cyberspace has provided the bloggers, and journalists of Wikileaks and the Arab awakening with the opportunity to question the political structure. They knew that their real power was the ability to speak, and to be heard.
  8. They also understood that they had the right to know.
  9. If we play our cards right, the internet will make it possible for everybody on the internet to satisfy his curiosity to the fullest extent that is presently known by our species. Everyone interested, can know what is presently known.
  10. Nothing like this has had ever happened before.
  11. To achieve that, we have to realize that we cannot own free speech.
  12. Copyright is the wrong model for monetizing the expression of the mind. Thought is not a thing, … it is an action. The more a thought is heard and understood, the more powerful it becomes. It’s not like physical goods.
  13. Because of the old model of thinking of expression as a thing that must be regulated towards scarcity, there are many things going on right now that are militating against Freedom of expression.
  14. Comcast, yesterday, stopped all of our access to PirateBay. PirateBay is a notorious copyright infringement site, but is also an important cause with different members from European parliaments.
  15. The other thing is that the Freedom of expression necessarily includes tolerance to the other person’s right to speak up his mind. No matter how abominable his ideas may be.
  16. The answer to hate speech is love speech, and the answer of the speech you can’t stand is the speech of your own heart. Go out there and stop those who will try to own Freedom of expression.
  17. Take a look at the Electronic Frontier Foundation.

What if we have already been ruled by an Intelligent Machine – and we are better off being so?

Common people and even reputed scientists, such as Stephen Hawking, have been worrying about the very menace of machines provided with Artificial Intelligence that could rule the whole human genre in detriment of our liberty and welfare. This fear has two inner components: the first one, that the Artificial Intelligence will outshine human intellectual capabilities; and the second one, that the Intelligent Machines will be endowed with their own volition.

Obviously, it would be an evil volition or, at least, a very egotistic one. Or maybe the Intelligent Machines will not necessarily be evil or egotistic, but only as fearful of humans as they are of machines – although more powerful. Moreover, depending on their morality on a multiplicity of reasonings we cannot grasp, we could not ascertain whether their superior intelligence (as we suppose the feared machines would be enabled with) is good or evil, or just more complex than ours.

Nevertheless, there is still a additional third assumption which accompanies all the warnings about the perils of thinking machines: that they are a physical shell inhabited by an Artificial Intelligence. Inspired by Gilbert Ryle’s critique of Cartesian Dualism, we can state that the belief of Intelligent Machines provided with an autonomous volition rests upon the said assumption of an intelligence independent from its physical body: a self-conscious being whose thoughts are fully independent from the sensory apparatus of its body and whose sensations are fully independent from the abstract classification which its mind operates by.

The word “machine” evokes a physical device. However, a machine might as well be an abstract one. Abstract Machines are thought experiments compounded by algorithms which delivers an output from an input of information which, in turn, could be used as an input for another circuit. Theses algorithms can emulate a decision making process, providing a set of consequences for a given set of antecedents.

In fact, all recent cybernetic innovations are the result of the merging of abstract machines with physical ones: machines that play chess, drive cars, recognize faces, etc.. Since they do not have an autonomous will and the sensory data they produce are determined by their algorithms, whose output, in turn, depends on the limitation of their hardware, people are reluctant to call their capabilities “real intelligence.” Perhaps the reason of that reluctance is that people are expecting automata which accomplish the Cartesian Dualism paradigm of a thinking being.

But what if an automaton enabled with an intelligence superior to ours has already existed and is ruling at least part of our lives? We do not know of any being of that kind, if for a ruling intelligent machine we regard a self-conscious and will-driven one. But the ones who are acquainted with the notion of law as a spontaneous and abstract order will not find any major difficulty to grasp the analogy between the algorithms that form an abstract machine and general and abstract laws that compound a legal system.

The first volume of Law, Legislation, and Liberty by Friedrich A. Hayek, subtitled “Norms [Rules] and Order” (1973), is until today the most complete account of the law seen as an autonomous system, which adapts itself to the changes in its environment through a process of negative feedback that brings about marginal changes in its structure. Abstract and general notions of rights and duties are well-known by the agents of the system and that allows to everyone to form expectations about the behaviour of each other. When a conflict between two agents arises, a judge establishes the correct content of the law to be applied to the given case.

Notwithstanding our human intelligence -using its knowledge about the law- is capable of determining the right decision to each concrete controversy between two given agents, the system of the law as whole achieves a higher degree of complexity than any human mind might reach. Whereas our knowledge of a given case depends on acquiring more and more concrete data, our knowledge of the law as a whole is related to more and more abstract degrees of classifications. Thus, we cannot fully predict the complete chain of consequences of a singular decision upon the legal system as a whole. This last characteristic of the law does not mean its power of coercion is arbitrary. As individuals, we are enabled with enough information about the legal system to design our own plans and to form correct expectations about other people’s behaviour. Thus, legal constraints do not interfere with individual liberty.

On the other hand, the absolute boundary to the knowledge of the legal system as a whole works as a limitation to the political power over the law and, thence, over individuals. But, after all, that is what the concept of rule of law is about: we are much better off being ruled by an abstract and impersonal entity, more complex than the human mind, than by the self-conscious -but discretional- rule of man. Perhaps, law is not at all an automaton which rules our lives, but we can ascertain that law -as a spontaneous order- prevents other men from doing so.

SMP: Separating the Technology of Bitcoin from the Medium of Exchange

At the Sound Money Project I have a comment on the importance of distinguishing between the bitcoin technological innovation and its use as a means of exchange. A solid technological innovation does meant that bitcoin is necessarily properly coded to be a successful monetary experiment.

Bitcoin is back in the spotlight as its price has soared in recent weeks. The most enthusiastic advocates see its potential to become a major private currency. But it is important to remember bitcoin is a dual phenomenon: a technological innovation and a potentially useful medium of exchange. One might recognize the technology as a genuine innovation without accepting its usefulness as a medium of exchange.

Continue reading at SMP.

The Political is about to disrupt the crypto-currency scene -or at least they say so.

According to this Financial Times report, Bitcoin is at the verge of a critical decision.

The implications of the chosen terms (“existential crisis,” “decisive leadership,” “political flaw”) are not casual. It looks like the market that crypto-currency had carried from the beginning contain the germ of its own destruction. As in an Escher’s drawing, Bitcoin has unraveled its political strand and its whole existence is, now, dependent upon a moment of decision of the sovereign: the assembly of miners. The decisionist narrative would be fulfilled if the political decision had to be taken by acclamatio instead of voting.

Nevertheless, the decision by acclamation would be still possible: the ones who want “Bitcoin Core” might follow one direction and the other ones, who choose “Bitcoin Unlimited,” might follow their own way. After all, no existential crisis can be solved by voting.

So, which is inside of which? Is the market framed in a system depending upon a political decision of the sovereign? Or does every decision need to be taken inside a spontaneous framework of rules?

We are used to praising Bitcoin for its independence from any political factor: Bitcoin supply depends on a set of rules which allows the public to form expectations about its value with a high degree of probability of proving to be correct.

Taken in isolation, Bitcoin emulates the market. Nevertheless, being independent of political institutions is not enough for being “the market.” The attractiveness of Bitcoin is that it operates in an open system of competition of currencies. In this system, there are many other crypto-currencies, and there might be several variances of Bitcoins as well –in esse or in posse.

Imagine, for example, that Bitcoin effectively splits into Bitcoin Core and Bitcoin Unlimited. Which of the two will prevail over the other? It does not matter. What really matters is that there will be several variances of currencies in competition. The factors that determine the selection of the prevailing currency depends upon a higher level of abstraction that impose an absolute limit to our knowledge.

So, is Bitcoin in an existential crisis? Does a political decision need to be made? Maybe.

But that does not imply that “The Political” will take over the reins of the crypto-currency market. Moreover, opposite political decisions are the linkages which the spontaneous selection process -in this case, of currencies- is made of. In this sense, “Bitcoin Core” and “Bitcoin Unlimited” are attributes of a competitive system and the final prevalence of one variance among other alternatives will not be the result of a deliberate decision but of an abstract process of evolution.

Inventions that didn’t change the world

Have you ever learned about an amazing invention–whether it was the Baghdad battery or the ancient Roman steam engine or Chinese firecrackers–and wondered why it didn’t do more to change the world? In this podcast, we examine a selection of curiosities and explore hypotheses for why their inventors didn’t use them to full effect.

We move VERY quickly through a range of fascinating examples and hypotheses, and therefore leave a lot up to discussion. We hope to see your thoughts, feedback, and additions in the comments section!

For any invention that you want to learn more about, see the links below:

Knossos’ toilets

In the 2nd millennium BC, a “palace” (now thought to be a building that served as administrative, trade, and gathering hub) had running-water toilet flushing. Much like the Roman Cloaca Maxima, likely a HUGE public-health benefit, but basically died out. Does this show that military protection/staving off the “Dark Ages” was the only way to maintain amazing inventions?

Link: http://www.nature.com/news/the-secret-history-of-ancient-toilets-1.19960;

The Nimrud lens

Whether it was a fire-starter, a magnifying glass, or (for some overeager astronomy enthusaists), the Neo-Assyrian ground-crystal Nimrud lens is an invention thousands of years out of place. While the Egyptians, Greeks, and Romans all used lenses of different sorts, and glass-blowing was certainly popular by the 1st century BC in Roman Egypt, no glass lenses were made until the Middle Ages and the potential scientific and engineering uses of lenses–that can hardly be understated even in their 16th-to-18th-century applications–had to wait another couple millennia. Many devices like the Baghdad battery and Antikythera device are heralded for their possible engineering genius, but this seems like a simple one with readily available applications that disappeared from the historical record.

https://en.wikipedia.org/wiki/Nimrud_lens

Hero of Alexandria’s steam engine

In the 1st century AD, Hero was a master of simple machines (that were mostly used for plays) and also invented a force pump, a wind-powered machine, even an early vending machine. However, he is likely most famous for his Aeolipile, a rotating steam engine that used heated water to spin an axle. The best attested use of this is for devotion to the divine and party tricks.

https://en.wikipedia.org/wiki/Aeolipile

The ancient mechanical reaper

Ancient Gallo-Romans (or just Gauls) invented a novel way of grain harvesting: rather than using sickles or scythes, they used a mechanical reaper, 1700 years before Cyrus McCormick more than tripled the productivity of American farmers. This antiquated device literally but the cart before the oxen and required two men to operate: one man to drive the beasts, and another to knock the ears off the stalk (this reaper was obviously far less sophisticated than McCormick’s). This invention did not survive the Volkswanderung period.

http://www.gnrtr.com/Generator.html?pi=208&cp=3

http://reapertakethewheel.blogspot.com/2013/03/impacts-of-invention.html

Note: the horse collar (which allowed horses to be used to plow) was invented in 1600-1400 BC in China AND the Levant, but was not applied widely until 1000 AD in Europe. https://en.wikipedia.org/wiki/Horse_collar.

Inoculation

Madhav, an Indian doctor, compiled hundreds of cures in his Nidana, including an inoculation against smallpox that showed an understanding of disease transmission (he would take year-old smallpox-infected flesh and touch it to a recently made cutaneous wound). However, the next 13 centuries did not see Indian medical understanding of viruses or bacteria, or even copied techniques of this, development. https://books.google.com/books?id=Hkc3QnbagK4C&pg=PA105&lpg=PA105&dq=madhav+indian+smallpox+inoculation&source=bl&ots=4RFPuvbf5Y&sig=iyDaNUs4u5N7xHH6-pvlbAY9fcQ&hl=en&sa=X&ved=0ahUKEwic8e-1-JXVAhUp6IMKHfw3DLsQ6AEIOjAD#v=onepage&q=madhav%20indian%20smallpox%20inoculation&f=false

At least, thank god, their methods of giving nose jobs to those who had had their noses cut off as a punishment survived: https://en.wikipedia.org/wiki/History_of_rhinoplasty

The Chinese:

List of all chinese inventions:

https://en.wikipedia.org/wiki/List_of_Chinese_inventions#Four_Great_Inventions

Gunpowder

Gunpowder was discovered by Chinese alchemists attempting to discover the elixir of life (irony, no?)

https://www.thoughtco.com/invention-of-gunpowder-195160

https://en.wikipedia.org/wiki/Four_Great_Inventions

(maybe a good corollary would be Greek fire, which was used effectively in naval warfare by the Byzantines, but which was not improved upon and the recipe of which is still secret: https://en.wikipedia.org/wiki/Greek_fire)

Printing

The Chinese invented the printing press possibly as early as the 6th century. However, unlike the explosion of literacy seen in much of Europe (particularly Protestant Europe–see our last podcast), the Chinese masses never learned to read. In fact, in 1950 fewer than 20% of Chinese citizens were literate. Compare this to Europe, where some societies saw literacy rates of as high as 90% (Sweden, Male population) in some societies within a few centuries of the introduction of the printing press. Why? There may be several reasons–cultural, religious, political–but in our opinion, it would have to be the characters: 100,000 blocks were needed to create a single set.

http://www.nytimes.com/2001/02/12/news/chinas-long-but-uneven-march-to-literacy.html

https://en.wikipedia.org/wiki/History_of_printing_in_East_Asia

They also invented pulped paper by the 2nd century BC: https://en.wikipedia.org/wiki/List_of_Chinese_inventions.

The compass

Invented by 200 BC for divination and used for navigation by the Song dynasty; despite this and the availability of easily colonizable islands within easy sailing distance, the Chinese did not colonize Indonesia, Polynesia, or Oceania, while the Europeans did within the century after they developed the technology and first sailed there.

https://en.wikipedia.org/wiki/History_of_the_compass.

The rudder

While they did not invent the rudder, they invented the “medial, axial, and vertical” sternpost rudder that would become standard in Europe almost 1,000 years before it was used in Europe (1st century AD vs 11th century).

Natural gas

The Chinese discovered “fire wells” (natural gas near the surface) and erected shrines to worship there.

https://link.springer.com/referenceworkentry/10.1007%2F978-1-4020-4425-0_9568

They even understood their potential for fuel, but never developed beyond primitive burning and bamboo piping despite having advanced mining techniques for it by the 1st century BC.

Chinese miscelleni:

Hydraulic powered fan: https://en.wikipedia.org/wiki/Fan_(machine)#History

Cuppola furnace for smelting and molding iron: https://en.wikipedia.org/wiki/Cupola_furnace.

Coke as a fuel source: https://en.wikipedia.org/wiki/Coke_(fuel).

Belt-drive spinning wheel: https://en.wikipedia.org/wiki/Coke_(fuel).

The Precolumbian wheel

The pre- and early Mayans had toys that utilized primitive wheels, but did not use them for any labor-saving purpose (even their gods were depicted carrying loads on their backs). This may have been because scaling up met with mechanical difficulties, but the potential utility of wheels in this case with a bit of investment literally sat unrealized for centuries.

https://tcmam.wordpress.com/2010/11/11/did-pre-columbian-mesoamericans-use-wheels/

The Tucker:

http://www.smithsonianmag.com/history/the-tucker-was-the-1940s-car-of-the-future-135008742/

The following book contained some of our hypotheses:

https://books.google.com/books?id=ynejM1-TATMC&pg=PA399&lpg=PA399&dq=roman+and+greek+labor-saving+devices&source=bl&ots=BI6GVGTrxC&sig=8ZJqirOVUyjH7TNq0fcW6UUPn1k&hl=en&sa=X&ved=0ahUKEwj55O7395XVAhVqwYMKHSb2Dy4Q6AEIKTAB#v=onepage&q=roman%20and%20greek%20labor-saving%20devices&f=false

 

The rest of our hypotheses were amalgamated from our disparate classes in economics and history, but none of them are our own or uncommon in academic circles. Thanks for listening!