On using space

From Yglesisas:

Green space and public space are good things, but they’re really only good if the spaces are usable and used in practice by the people who live and work in the area.

OK. Green space, public space are not synonymous with open space. Clearly I'm an advocate for green public spaces.

Propaganda and Farmers Markets

Want some arguments for avoiding Farmers Markets and settling for the grocery store?

A handy list appeared yesterday in a blog from the local paper, all guaranteed to push the right buttons. Too bad there was no information or thought involved:

10 things your farmer’s market won’t tell you
July 15, 2009 at 11:48 am by
Sarah Diodato


I’ve only been blogging about the topic of saving money for a few months, but I’ve already learned a great deal about how important it is to many consumers that they have access to fresh, locally grown food. Most of what I hear is very positive about local farmer’s markets.
However, Smart Money has list of 10 things you should know:

It comes out of your taxes. Many are supported by your tax dollars, even if you don’t shop there.

It’ll cost more. However, because it’s fresh, hasn’t been transported thousands of miles, and has been allowed to ripen on the vine, it will probably taste better.

Even though they say it’s local, it may not be after all. Some farmers buy produce wholesale and tell the consumer it’s from their land.
....

Check out the comments, including mine:

It would be helpful if the article provided information rather than simply playing on emotions.

To take the first point: “It comes out of your taxes. Many are supported by your tax dollars, even if you don’t shop there.”

What information would actually be helpful here? One might ask:

* How much of my “big box” purchase is subsidized, compared to my farmers market purchase? (We do know that the majority of farm subsidies are received by the very largest growers, hence we might suspect that farmers markets receive LESS assistance when everything is added up.)

* What tax dollars and income are created when I shop at a farmers market rather than a chain? (That is, how does your spending “multiply” in additional spending around the community? The answer depends on where you shop, and, not surprisingly a small local grower will reuse your dollars within the community more than just about anyone else.) I’ll leave alone the remaining nine talking points.

A discussion of the Waxman-Markley cap and trade bill.

Check out this commentary on the House passed climate change bill.

A tutorial is here.

More on health care

Mankiw once again finds an interesting story, but gets it all wrong:

This chart from Andrew Biggs "shows spending on veterinary care, which I pulled from the Consumer Expenditure Survey, and national health expenditures (for people) from the National Income and Product Accounts.... the rate of growth of spending from 1984 to 2006 wasn’t all that different—and in both cases, spending
grew faster than the rate of economic growth. As new technologies are developed for humans, we adopt them for Bowser and Fifi—because we can afford to and we think it’s worth it."

So, veterinary care (I feel OK about markets working well here) sees rapidly increasing spending --- starting from a very low level. No doubt marginal benefits are very high because we didn't do much beyond vaccinations and palliative care in the past.

Human health care sees the same spending escalation. But here marginal benefits (normalized for spending) have to be much lower because we started (1984!) from a relatively high standard of care already.

So either we're spending too little on pets, or too much on people. And messed up markets somewhere would be the explanation. Care to guess where?

Oh yes ... the Mankiw thinks an explanation for the 250% increase is "growing incomes." Except median household incomes haven't grown.

Student engagement and campus design

It's the season to add dorm space. Maybe it can be done in a way which enhances engagment and connections. We'll see.

Here's my contribution.

Why health care markets fail

Thoughts on why your a priori beliefs might be that health care markets would fail:

 

1. Individuals are not wired to deal rationally with risk. To some extent we manage this through insurance. But think about how they operate:

 

Low probability in the short run (at least for younger individuals). Think about what we do for

auto insurance: the state requires you have it in order to drive a vehicle.

 

home insurance: the holder of your mortgage requires it.

 

How many people would in fact choose not to purchase auto or home insurance if not forced to?

Now think about very high probablity events in the long run (but only for a relatively short period at the end of life).

We deal with other high probability long run needs through a variety of forced or strongly encouraged "voluntary" systems: that would be social security and pension/defined contribution plans, respectively.

 

Conclusion: not very much insurance coverage is "voluntary."

 

2. Lots of medical care is predictable, and thus can't be insured. That is, costs can't be spread out across individuals by insurance. For example, keeping a type I diabetic going is simply going to cost a whole lot. There are really only two options (for the situation of an average income individual):

the individual does not receive significant amounts of care and dies young.

 

society subsidizes care through forced contributions from everyone else.

 There is little way that private insurance can reasonably address this situation.

 

 

3. Asymmetric information. Related to (2), insurance firms are likely to have a very good idea what you will cost them in the future, but you may have much less idea. Those who are most likely to need insurance coverage of future costs are thus most likely to not have that coverage. Insurance firms will work hard to only cover low risks. This is called adverse selection, and is really the basic business plan in health insurance.

 

Most commonly talked about is the reverse of this: you know about a medical condition which an insurance company does not. This is classis moral hazard and drives up costs for everyone else (thus making insurance less available).

Why is Greg Mankiw upset about cap and trade?

We may finally get meaningful climate policy in the form of a cap and trade bill limiting carbon emissions. Because the emerging legislation will give away (rather than auctioning) maybe half of the cap, this is a perfect illustration of Mankiw's (tongue in cheek) "first law of carbon taxation":

Cap-and-trade = Carbon tax + Corporate welfare

I have yet to meet major legislation that did not include substantial corporate welfare. And giving away big portions of the cap does not change any of the environmental benefits (e.g. acid rain regulation since 1990) Yet the efficiency loving Mankiw denounces the cap and trade bill as "highly flawed." What's the deal?