Later On

A blog written for those whose interests more or less match mine.

Archive for November 13th, 2009

How incentives backfire

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Barry Schwartz has an interesting column in Business Week in which he shows how incentives do not work because they cannot work. It’s a good column, but for a really thorough treatment, get Alfie Kohn’s Punished By Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes. That link is to Amazon, so you can read about it, but you can get secondhand copies quite cheaply.

While I’m at it, I’ll also recommend Alfie Kohn’s book No Contest: The Case Against Competition, also excellent. Here are copies for $1.

Schwartz’s column begins:

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Written by LeisureGuy

13 November 2009 at 5:21 pm

How Markets Fail

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Sounds like a very interesting book, here reviewed by Chris Farrell in Business Week:

How Markets Fail:
The Logic of Economic Calamities
By John Cassidy
Farrar, Straus & Giroux; 390 pp.; $28

Economist John Maynard Keynes had a weakness for rhetorical flourishes. At the end of his classic The General Theory of Employment, Interest, and Money, he wrote: "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." To author John Cassidy, it’s a quote that applies to the practical decision-makers of our own time—and that explains the roots of our own Great Recession.

In his ambitious How Markets Fail: The Logic of Economic Calamities, Cassidy, an economics writer for The New Yorker, offers a powerful argument that the current generation of investors and policymakers has been manacled by what he calls the "utopian" free-market school of economics. In an effort to debunk that "ideology," which he sees as holding sway in academia and among policymakers in recent decades, Cassidy marshals a deep understanding of economic intellectual history, deftly explaining the principal ideas of such towering figures as Adam Smith, Friedrich von Hayek, Léon Walras, Kenneth Arrow, Milton Friedman, and Robert Lucas. This long view allows him to place in context the free marketers’ notion that self-interest and competition "equals nirvana." In the author’s words: "Between the collapse of communism and the outbreak of the subprime crisis, an understandable and justified respect for market forces mutated into a rigid and unquestioning devotion to a particular, and blatantly unrealistic, adaptation of Adam Smith’s invisible hand." And it was this faith, he goes on to say, that led Alan Greenspan, among others, to turn a blind eye to what was happening in the real world of money and business.

Cassidy has his intellectual heroes, too. They are the advocates of what he calls "reality-based economics"—grappling with market failures, disaster myopia, speculative frenzies, and other economic complexities. John Maynard Keynes, the great scholar of economic-crisis management, is one such thinker. So are the experimental psychologists Amos Tversky and Daniel Kahneman, the mathematician Benoit Mandelbrot, and Hyman Minsky, the expert on financial manias. "Reality-based economics … affords the concept of market failure a central position, recognizing the roles that human interdependence and rational irrationality play in creating it," writes Cassidy. "If further calamities are to be avoided, policymakers need to make a big mental shift and embrace this eminently practical philosophy."

How Markets Fail is a nuanced book. That’s a major attraction in an era when …

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Written by LeisureGuy

13 November 2009 at 5:12 pm

Posted in Books, Business, Daily life

Cutting healthcare costs without waiting for Congress

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Very interesting article by Catherine Arnst in the current issue of Business Week:

Seven hundred billion dollars. That’s a ballpark estimate of how much money is wasted in the U.S. medical system every single year, according to a new Thomson Reuters (TRI) report. A sum equal to roughly one-third of the nation’s total health-care spending is flushed away on unnecessary treatments, redundant tests, fraud, errors, and myriad other monetary sinkholes that do nothing to improve the nation’s health. Cut that figure by half, and there would be more than enough money to offer top-notch care to every one of America’s 46 million uninsured.

None of the health-care reform bills on the table in Washington do anything meaningful to address that wasted $700 billion. Nor do they call for changes in the underlying flaw that drives much of the waste—the fee-for-service system that pays doctors and hospitals for the amount of medical care delivered rather than for its quality. Under fee-for-service there is no financial incentive for doctors to eliminate waste, since they wouldn’t pocket any of the resulting savings. They would just earn less.

By leaving this perverse reward system in place, Congress is virtually guaranteeing that health-care reform legislation, if passed, will do nothing to "bend the curve" of rising health-care costs, as President Barack Obama originally set out to do. Even the few cost-cutting efforts that the bills do include won’t go into effect until at least 2013. As a result, U.S. health spending is on track to double over the next 10 years, to $5.2 trillion, about 21% of the gross domestic product.

Or possibly not. Politicians may be reluctant to rein in the medical-industrial complex, but the private sector is forging ahead. Faced with health-care costs that keep rising 6% to 7% every year—even during this year of negative overall inflation—plenty of insurers, hospitals, employers, and communities are figuring out how to offer better care for less money. They are willing to take experimental leaps in an attempt to solve some of the health system’s most intractable problems.

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Written by LeisureGuy

13 November 2009 at 5:09 pm

Posted in Business, Healthcare

Here comes computational photography

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I think Steve C. and Scott F. will be very interested in this article by Jim Giles in New Scientist:

THE signs of the digital photography revolution are hard to miss, from cameras embedded in our cellphones to gigabytes of images stored on hard drives. But if you thought the revolution finished with the death of chemical film, think again. Computational photography promises equally dramatic changes, turning even the most ham-fisted of snappers into veritable Cartier-Bressons.

We are on the cusp of a new era in which every camera comes with a sophisticated built-in computer, says Ramesh Raskar of the Massachusetts Institute of Technology, who delivered a presentation on advances in computational photography at an imaging technology conference in Monterey, California, this week. Low-cost processing and memory combined with new digital sensors will deliver richer images created by fusing elements from multiple shots and even video.

Hints of the changes to come can be found in cameras such as Casio’s EX-F1, which launched last year and has been dubbed the first computational camera. In poor light, photographers face a difficult choice: use a flash, which can produce a harsh illumination, or go for a long exposure, where the risk of image blur increases. The EX-F1 offers a third option. It shoots a burst of images at long exposures and its computer merges the shots into a single image, reducing the blur as it does so. The process may not yet outperform established anti-blur techniques, such as using a tripod, but its existence is a significant advance in itself.

In labs around the world, researchers are developing a slew of other computational tricks for cameras. "We’re creating images that people have never been able to produce," says Marc Levoy at Stanford University in California.

Many of the new techniques tackle the old problem of …

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Written by LeisureGuy

13 November 2009 at 3:51 pm

Goodbye, tuna

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People in general seem to be incredibly stupid. Take a look at this:

Times are tough for tuna. The guidance of scientists that advise groups that manage tuna stocks is falling on deaf ears.

The International Commission for the Conservation of Atlantic Tunas meets this week in Brazil to set catch limits. ICCAT’s scientific advisers have told it that stocks of the giant bluefin tuna are plummeting towards collapse. Catches in 2008 were at three times the ICCAT limit, which is itself more than what its scientific advisers consider sustainable (see "Tigers of the sea")Movie Camera. "It’s like the year before the collapse of the northern cod," says Dan Pauly at the University of British Columbia, Canada. In 1992 the Newfoundland cod fishery collapsed. It never recovered.

Giant bluefin tuna stocks are plummeting, like the year before the collapse of the northern cod

As stocks fall in the Atlantic, the tuna fishing fleets are targeting the Indian Ocean. So far, stocks of several tuna species there appear in good shape, with the exception of the yellowfin. According to the scientists advising the Indian Ocean Tuna Commission (IOTC), stocks of yellowfin are being overfished. The panel of scientists will meet later this month to discuss the available data, but it may prove futile: the IOTC’s member nations rejected the panel’s recommended catch limits in April. And in September, India launched a new ocean-observing satellite. It will be used to spot plankton blooms, which attract small fish and, in turn, tuna – so the fishing boats will know where to go.

So those who depend on the tuna for their livelihood have decided that the best course is to fish the tuna to extinction, probably within three or four years.

OTOH, we still have many people who begin smoking cigarettes after all that we know about them. You can see why I believe that humanity will fail to address global warming until the body count from that is multiple millions a year (at which point it will be too late, of course).

Written by LeisureGuy

13 November 2009 at 3:46 pm

Darwin’s masterpiece revisited

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Very interesting article in the New Scientist. The intro:

This month marks the 150th anniversary of the most influential piece of popular science writing ever published. A few years ago, New Scientist listed reading On The Origin of Species as one of the 100 things to do before you die. To do so is to experience the extraordinary sensation of having a scientific genius enter your mind to guide you through his most important theory. Now we have asked the geneticist, evolutionary thinker and author Steve Jones to summarise and update the book for the 21st century – and, we hope, to inspire readers to experience Darwin’s astounding, world-changing writing first-hand

UNIQUE among scientific theories, evolutionary biology finds its roots in a popular book by a single author. The grey-bearded genius presented a new and radical view of existence: that life has changed over time and space, in part through a simple process called natural selection.

Charles Darwin called his work "one long argument". To a 21st-century reader it seems lengthy indeed, with only a single illustration to enliven its 150,000 words. But Darwin was a clear thinker and the book is an impressive piece of advocacy, moving from the familiar – how animals on farms have changed – to the less so, embryos and instinct included.

As for your doctrines I am prepared to go to the Stake if requisite… I trust you will not allow yourself to be in any way disgusted or annoyed by the considerable abuse and misrepresentation which unless I greatly mistake is in store for you… And as to the curs which will bark and yelp – you must recollect that some of your friends at any rate are endowed with an amount of combativeness which (though you have often and justly rebuked it) may stand you in good stead – I am sharpening up my claws and beak in readiness. — Thomas Henry Huxley

Darwin also shows how what might seem to be problems for his argument, such as the uncanny perfection of complex structures like the eye, are in fact part of the solution, and how apparent weaknesses in his case – the incomplete nature of the fossil record included – can easily be explained. Now and again he was wrong, as when, unaware of Gregor Mendel’s work on genetics, he claimed that inheritance is based on the mixing of bloods, but mostly he was right.

Darwin described the process of evolution as "descent with modification". Today that might be rephrased as "genetics plus time". Offspring resemble their parents because they inherit DNA from them, but the copying process is not precise. Every round has errors, or mutations, and although they are individually rare – with perhaps one or two mutations in working genes each generation in humans – they can soon build up vast diversity. A copy of a copy is always imperfect, and for that reason alone, evolution is inevitable.

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Written by LeisureGuy

13 November 2009 at 3:41 pm

Prohibition ebbing

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Interesting article in the Economist (click graph to enlarge):

Wristslapping

THE Green Relief “natural health clinic” in a bohemian part of San Francisco doesn’t sound like an ordinary doctor’s surgery. For those who wonder about the sort of relief provided, its logo—a cannabis leaf—is a clue. Inside, in under an hour and for $99, patients can get a doctor’s letter allowing them to smoke marijuana in California with no fear of prosecution. In a state that pioneered bans on smoking tobacco, smoking cannabis is now easier than almost anywhere in the world.

California, with its network of pot-friendly physicians, offers the most visible evidence of a tentative worldwide shift towards a more liberal policy on drugs. Although most countries remain bound by a trio of United Nations conventions that prohibit the sale and possession of narcotics, laws are increasingly being bent or ignored. That is true even in the United States, where the Obama administration has announced that registered cannabis dispensaries will no longer be raided by federal authorities.

From heroin “shooting galleries” in Vancouver to Mexico’s decriminalisation of personal possession of drugs, the Americas are suddenly looking more permissive. Meanwhile in Europe, where drugs policy is generally less stringent, seven countries have decriminalised drug possession, and the rest are increasingly ignoring their supposedly harsh regimes. Is the “war on drugs” becoming a fiction?

Reformers are in a bold mood. Earlier this year a report by ex-presidents of Brazil, Colombia and Mexico called for alternatives to prohibition. On November 12th a British think-tank, Transform, launched a report* setting out ideas on how drugs could be legally regulated. For every substance from cannabis to crack, it suggests a form of regulation, via doctors’ prescriptions, pharmacy sales or consumption on licensed premises.

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Written by LeisureGuy

13 November 2009 at 3:33 pm

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