What I've been up to

I went to a great Jason Mraz concert last night. (Great, that is, except for the loud, drunken couple with seats directly behind us--talk about negative externalities!) If you don't know who Jason Mraz is, click here.

But the real surprise of the night was an excellent warm-up act, K'Naan.

The Strangest Sentence I've Read Lately

From Megan McArdle:

But the fact that he mistakes his ignorance for a fact about the universe makes me wonder if pharmacoeconomics is what my college boyfriend's roommate used to do with a few grams of cocaine and a copy of Mankiw's Principles.

It is always nice to see my product get new uses.



By the way, the entire post, which is on the benefits of Big Pharma, is worth reading, as is most of Megan's blogging.

Elmendorf in Action

If you have a spare hour and a half, watch this video to see one of my favorite economists testifying in front of the Senate budget committee on the topic of health reform.

Health Reform: Simple or Not?

Contrast the commentary of Paul Krugman and Keith Hennessey.

To Paul, the administration's health plan is simple and straightforward. To Keith, it is a nonstarter.

Why do these two smart commentators reach such opposite conclusions? The essence of the difference, I think, is that Paul is mainly concerned with universal coverage and is happy to put off discussion of the government budget constraint to another day, while Keith is focused on how the reforms will be paid for and, in particular, on the administration's claim that a major goal of health reform is to put the government on a more sustainable fiscal path.

A large part of the policy debate boils down to this: Are you more worried about the problem of the uninsured or about the long-term fiscal imbalance?

Update: Recent polling shows that the Krugman-Hennessey divide is representative of the nation more broadly and that more Americans are siding with Keith:

There is a huge partisan gap on perceptions of the U.S. health care system. Seven-out-of-10 Republicans rate it as good or excellent, but only one-of-four Democrats agree. Among those not affiliated with either major political party, 53% rate the current system as good or excellent while just 18% say it’s poor.

Over the past few months, as the health care reform debate has raged, confidence in the current system has increased significantly among Republicans and unaffiliated voters. There has been little change among Democrats.

Just 28% say they are willing to pay higher taxes so that all Americans can have health insurance. Sixty percent (60%) are opposed. Those figures are little changed since May.

Recent polling has shown that cost, not universal coverage, is the top concern about health care.

A Senator joins the Pigou Club

The club welcomes a new member:

Sen. Bob Corker came out swinging against the climate bill that the House passed in June.

“I didn’t think it was possible, but the Waxman-Markey climate bill appears to be even more problematic than the climate bill that tanked in the Senate last spring,” he said, referring to the Lieberman-Warner bill that he voted against in 2008. “I don’t know of many special interests that don’t receive a pay-off in this [Waxman-Markey] legislation, and if it comes to the Senate floor in this form, I’ll vote against it.”...

Lately Corker has been insisting that he won’t accept anything short of a climate plan that auctions 100 percent of pollution permits and returns the money directly to Americans, and his preferred approach would be a carbon tax.

The Case for More Inflation

Tyler Cowen considers what monetary policy can do to get the economy going. For some related ideas, click here.

Obesity and Healthcare Costs

Two facts from the Wall Street Journal a few days ago:

The prevalence of obesity rose 37% between 1998 and 2006....Obese people spent 42% more than people of normal weight on medical costs in 2006.

This is consistent with what I said in a column on healthcare fallacies in the NY Times a couple years ago:

Americans are also more likely to be obese, leading to heart disease and other medical problems. Among Americans, 31 percent of men and 33 percent of women have a body mass index of at least 30, a definition of obesity, versus 17 percent of men and 19 percent of women in Canada. Japan, which has the longest life expectancy among major nations, has obesity rates of about 3 percent.



The causes of American obesity are not fully understood, but they involve lifestyle choices we make every day, as well as our system of food delivery. Research by the Harvard economists David Cutler, Ed Glaeser and Jesse Shapiro concludes that America’s growing obesity problem is largely attributable to our economy’s ability to supply high-calorie foods cheaply. Lower prices increase food consumption, sometimes beyond the point of optimal health.

FYI, here, from OECD data presented in the O'Neill study, are the percentages of the male population with a body-mass index of 30 or more (female obesity rates are similar):



Japan 2.8

France 9.8

Germany 14.4

Canada 17.0

U.K. 22.7

U.S. 31.1



The bottom line: Differences in healthcare costs and health outcomes, either over time or across countries, depend on a lot more than the national system of health insurance.