Archive for the ‘Science’ Category

Unintended consequences

August 9, 2011

A recurrent theme in this blog is that government regulation almost always has unintended (negative)  consequences. The latest example is the shortage in generic cancer drugs. These drugs are off-patent, so they should be cheap. But lately, many have become unavailable.

The reason is government regulation, specifically Medicare price controls, according to Ezekiel Emanuel (Rahm’s brother). In a 2003 law, government agreed to pay oncology doctors the ‘average selling price’ of cancer drugs they prescribe, plus a 6% overhead, rather than allow a classic fee for service. As the rules are set out by law, prices can only rise 6% every 6 months.

I am guessing the rule was written to prevent ‘excess profits’ by evil drug companies jacking up the price of a successful drug. But in their infinite wisdom, our governmental overlords overlooked that when a drug goes off patent, its price drops a lot, as much as 90%. As other manufacturers start making the generic drug, the price often fluctuates a lot as the market finds its new balance as the original and generic manufacturers figure out whether they can make and sell it profitably. The regulators cannot keep up with real-time conditions in the marketplace and (apparently quite frequently) the price can get stuck at a point too low to incentivize enough production to meet demand.

Amazingly, Emanuel sees government regulation as the answer:

One solution would be to amend the 2003 act to increase the amount Medicare pays for generic cancer drugs to the average selling price plus, say, 30 percent, after the drugs have been generic for three years. 

As if his proposed fix doesn’t have more unintended consequences lurking in possible scenarios that no one has yet imagined.

When will these folks lose their arrogance and realize that government regulations will never be smart enough to create the utopia they want to force upon us ?

Hat tip Megan McArdle.


Fallacies of targeted economic policies and green technology

September 8, 2010

I am generally against targeted economic policies, taxes and tax breaks. Though I am not ashamed to admit I itemize deductions on my tax return, I think that targeted policies usually try to micromanage economic behavior to a degree that is counterproductive and often has unintended consequences.

Consider cars and gas mileage. By fiat, the US government decrees an automaker’s allowable Corporate Average Fuel Economy (CAFE) that its entire fleet of cars and light trucks sold must achieve. The goal is to reduce energy consumption and dependence on foreign oil. But wait. Very heavy cars or SUVs aren’t part of the CAFE standard. So there is a perverse incentive to produce vehicles that are so heavy they don’t count which yields worse efficiency!

Sometimes, the intended consequence may only be a temporary phenomenon. Witness the recent Cash for Clunkers program. Intended to both stimulate car sales in the Great Recession and take older, less efficient vehicles off the road, it did temporarily raise car sales. But as the graph shows, sales fell right after the program ended, negating the uptick during the program. Consumers who timed their purchases right got lots of cash from everyone else, but the economy as a whole did not benefit. And the prices of used cars have soared, so those down on their luck can’t get cheap wheels. Hat tips HotAir and Coyote Blog.

Green technologies have a similar problem. You would think that making a product more energy efficient would lead to less energy consumption and less CO2 production. For example, lighting technology is going through a revolution. The incandescent bulb invented by Edison is gradually becoming extinct due to government fiat and competition from new technologies offering longer lifetimes and greater energy efficiency. Compact fluorescent bulbs (CFL) were the first wave and light-emitting diodes (LED) are the second.

But don’t count on the demand for electricity dropping anytime soon. You see, once government enacts a new regulation or a new technology becomes available, people and corporations react to it and change their behavior in ways that benefit them but don’t always produce the intended or naively predicted effect. The experts (in this case LED researchers from Sandia National Laboratories) are saying that people will change their behavior if more efficient lighting becomes available in ways that counter the purported savings.

Over the past three centuries, according to well-accepted studies from a range of sources, the world has spent about 0.72 percent of the world’s per capita gross domestic product on artificial lighting.

The article predicts that number will not change with LED technology. People will increase “the amount of lit work space and bright time,” thereby “increasing their creativity and the productivity of their society.”

Remember the CAFE standards ? When gas mileage went up with higher MPG cars, some people used the savings to buy more gas and travel more ! Keep that in mind if the administration comes out with new economic proposals between now and November.

Yet another invention predicted by science fiction

June 29, 2010

I am old enough to remember seeing Sleeper with Woody Allen in 1973, a science fiction comedy. One of the memorable scenes is when the robotic tailor measures Allen for a custom garment from ‘Ginsburg and Cohen, Computerized Fittings since 2873’. When the jacket emerges, many sizes too big, the robot says, “Okay, ve’ll take it in” in a yiddish accent.

Fast forward to 2010, where body scanners work and have helped produce custom tailored clothes for a decade. Which is not to say that scenes like Woody Allen’s don’t happen – Newsweek has an article describing an experience similar to the one in the movie. But I bet Brooks Brothers gets it right most of the time.

This is yet another example where science fiction has predicted the future. I remember reading about Isaac Asimov’s fictional Multivac computer, which can answer questions using all of human knowledge (kind of like Google) and is available from around the world (presaging the Internet). Make that that available around the galaxy: “He stared somberly at his small AC-contact. It was only two inches cubed and nothing in itself, but it was connected through hyperspace with the great Galactic AC that served all mankind. Hyperspace considered, it was an integral part of the Galactic AC.”

So I guess this is what we can look forward to !

Obama’s competence is limited – Gulf oil spill

June 18, 2010

OK. I waited one day to discuss the administration’s competence ! Let’s look at what the government didn’t do to help alleviate the effects of the Gulf oil spill. Three days after the rig exploded, the Dutch offered skimmers to help clean up the spill. The Dutch have hundreds of years experience managing things close to shore. Other foreign countries offered to help, as well. Did the administration welcome them with open arms? Not exactly:

After initially refusing to name them, the State Department on May 5 declared that 11 other countries and the UN also had offered skimmer boats and other assets and experts to prevent the oil from destroying dolphins, crabs, oysters, and this disaster’s other defenseless victims.

Alas, they were turned away in a State Department statement.

“While there is no need right now that the U.S. cannot meet, the U.S. Coast Guard is assessing these offers of assistance to see if there will be something which we will need in the near future.” Foreign Policy’s Josh Rogin translated this into plain English: “The current message to foreign governments is: “Thanks but no thanks, we’ve got it covered.'”

Whether this is due to the 1920 Jones act requiring US ships and crews to move cargo between US ports is unclear. What is clear is that one  sensible approach,vacuuming up oily water, letting the oil and water separate, and pumping the water back into the Gulf, is not being used because of stupid government regulations. The EPA prohibits releasing water with any oil. Never mind that replacing very oily water that you can suction with water with miniscule amounts of oil is a good thing.

And what the government has done – halting all deepwater drilling for 6 months – is both stupid policy and was done in the most underhanded way. The administration asked experts to review offshore drilling safety, then announced this policy and said the experts approved it. Problem is, they didn’t – the administration lied – and it actually reduces safety.

Salazar’s May 27 report to President Barack Obama said a panel of seven experts “peer reviewed” his recommendations, which included a six-month moratorium on all ongoing drilling in waters deeper than 500 feet. That prohibition took effect a few days later, but the angry panel members and some others who contributed to the Salazar report said they had only reviewed an earlier version of the Interior secretary’s report that suggested a six-month moratorium only on new drilling, and then only in waters deeper than 1,000 feet.

The problem with this policy is it leaves wells in the process of being drilled in limbo. It is much riskier to restart a well. The state of the well could have changed, and you probably won’t have the same people working on it with intimate knowledge of its condition – firsthand knowledge is always better than what was documented. And you will have driven experienced people out of the business since they have to feed their families in the next six months. Which is why the experts agreed with the moratorium on new drilling only.

More later on why this administration is incompetent.

Science, sermons, and calling Mom

May 21, 2010

It is pretty much required for rabbis delivering sermons on days when Yizkor, the memorial prayer is said, to talk about our connection with our parents, as that relationship forms the context for remembering the dead and contemplating our own mortality. So it wasn’t a surprise that in yesterday’s Shavuot sermon, the rabbi talked about calling your mother. What was remarkable is that the sermon brought in both science and advertising !

Rabbi Michelle Robinson told us about a surprising scientific study. The study found that speaking with your mother on the phone for 15 minutes lowers stress in 7-12 year old girls, as measured by cortisol and oxytocin levels, as much as 15 minutes of physical reassurance ! I guess this explains why many mothers get calls from our kids in college before and after exams. Just hearing their mother’s voice washes away some of the stress of the test. Probably, calling Dad does not have the same effect.

She also brought up a wonderful anecdote from the world of advertising. In 1979, South Central Bell had legendary college football coach Bear Bryant record a commercial. The tough football coach (he once played with a broken leg) was supposed to say “Have you called your mama today ?” Having recently lost his own mother, Bryant ad-libbed and added, “I sure wish I could call mine.” The phone company’s intuitive knowledge that simply hearing your mother’s voice is comforting was an astute business move. Legend has it the stock soared as grown men heeded Bryant’s ‘suggestion.’

Enjoy the commercial !

Is morality innate ?

May 12, 2010

The New York Times magazine has a fascinating article entitled “The Moral Life of Babies.” Scientist Paul Bloom describes an experiment where 1-year old babies watch a puppet show where one puppet is a good sharer but another keeps all the toys he gets. Both have a pile of treats in front of them.

At this point, the toddler was asked to take a treat away from one puppet. Like most children in this situation, the boy took it from the pile of the “naughty” one. But this punishment wasn’t enough — he then leaned over and smacked the puppet in the head.

Is this evidence that people are naturally moral and fair ? Some classical sources would disagree. In Leviathan, Hobbes felt that without government, human society is in a state of nature where no rules moderate our behavior. And the Bible says (Gen. 8:21) “the inclination of man’s heart is evil from his youth.”

Experiments and observations of animals indicate that some of them (at least) are instinctively fair. An experiment with capuchin monkeys had some receive a reward for giving up a rock to a human, some received no reward, and others got a reward for no work. Monkeys subject to unfair treatment refused to cooperate or refused their reward. Similarly, dogs that were unfairly rewarded for doing a trick stopped doing the trick as quickly or at all (here is the paper).

But the evidence with adults is mixed. In Superfreakonomics, a fascinating book, Steven Levitt and Stephen Dubner analyze psychology experiments that ‘prove’ that humans are innately altruistic (unselfishly concerned for the welfare of others). Lots of laboratory experiments claim to show that people act fairly even if there appear to be no consequences for acting unfairly. But experiments at baseball card shows by Levitt’s colleague John List showed that subjects under observation generally act fairly while those not under observation are more likely to cheat. Out of town dealers cheated more frequently, since they anticipated fewer negative consequences than a local dealer who might hear from an irate customer. Levitt and Dubner conclude that the psychology experiment subjects know they are being observed and that influences them to demonstrate altruism.

So, are only babies and animals innately fair while many adults have learned they can cheat and get away with it ? Depressing as it sounds, that would seem to explain the data I have seen.

NASA plans

April 16, 2010

I have been asked what I think of Obama’s plans for NASA. It’s understandable, since my Ph. D. work involved astronomical observations and I did get some NASA funding. And I did go to high school with a real astronaut, John Grunsfeld who flew 5 Shuttle missions, 3 of which involved repairs to the Hubble Space Telescope whose primary mirror aberration I helped measure back in 1991.

I am not up on the details, other than that I understand plans for developing multiple launch platforms have been scaled back. This will slow if not halt further manned space flight plans, but accelerate the development of the remaining launch platform. I think that is a good thing, since manned space flight does not have much to recommend it except the Wow factor. It is very costly to send humans into space, where they are exposed to intense radiation at the least and mortal danger at worst. Robotic unmanned spacecraft can do more science and exploration at a fraction of the cost. I think we will look back at the International Space Station as a fantastic waste of money.

One other feature of Obama’s plans is encouragement or reliance on private companies for launch capabilities. I am somewhat skeptical, since even with the private sector motivation to succeed, these are large endeavors that need government cooperation and appear to rely on government funding for development, which could literally be changed with the stroke of a pen. But my preliminary research indicates a number of companies are showing some success, so I am keeping an open mind.