Monday, January 29, 2018

It’s Not Straw-Manning to Answer Bad Arguments

I’ve been accused of straw-manning when I wasn’t. It is usually after I have responded to a terrible argument that I actually heard. This is always an obnoxious criticism. I want to say to my accuser:
No, look buddy. Someone actually made this terrible argument. In fact, it’s ubiquitous. I hear it all the time. If you have a more sophisticated version of this argument, we can discuss it. But people in your tribe are saying these foolish things. I’m glad you agree that the argument so often presented in favor of your position is a bad one. Maybe you can join me in helping to dispel it.
Of course, they never want to help. They never want to quench support for their favorite policies, even if it’s support coming from useful idiots. They want to hypocritically benefit from converts who were sold on a lie while criticizing people who spend their time debunking that lie.
(scoff) You’re refuting the bad version of the argument, not my preferred super-sophisticated version.
When someone stews over being snubbed in this way, my response is that the bad version is what dominates public debate. I’d love to have the more sophisticated version of the discussion, and in fact sometimes these are fascinating and I learn quite a lot from them. But the unsophisticated version is still out there doing enormous harm. I want to say, "Help me stop people from spreading the bad version, and we'll focus more intellectual energy on the 'sophisticated' version." 

As often happens, I wrote this post and discovered Bryan Caplan made the same point better than I could possibly make it.
Examples: I can truthfully say that until I started studying economics when I was 17, I had never heard that the minimum wage or drug safety regulation had any conceivable downside.  "Raising the minimum wage makes the poor richer, end of story" and "Stricter drug safety regulation makes everyone healthier, end of story" weren't straw men.  They were the only men in sight.

I take his point about libertarians sometimes making terrible arguments for my favored policies. I find this cringe-worthy when I see it. And actually I see this as an important test of intellectual honesty: Do you find bad arguments equally cringe-worthy when you agree with their conclusions as when you disagree?

Saturday, January 27, 2018

Ability Bias and the College Premium

I recently finished The Case Against Education by Bryan Caplan. It's great. I highly recommend it, so pick up a copy.

A big part of Caplan's story is that the "college premium," the bump in income that people earn by finishing college, is exaggerated. You can't just compare salaries of "people who finish college" to "people who don't finish college" and say that the college education explains the difference. Maybe people who attend and finish college are different from people who don't?

Statisticians have an obvious way of fixing this problem: measure ability, and control for it in a regression analysis. What remains after controlling for "ability" will be the true college premium, eliminating the selection bias whereby high earners disproportionately earn college degrees. Well, sort of. Caplan has an old blog post fleshing this out. Read that for the full details; the links within that post are also excellent. If you believe the numbers in Caplan's post, ability bias accounts for ~40% of the college premium. A raw comparison of "high-school graduates" to "college graduates" grossly overstates the return to education.

Or maybe not! Labor economists (who Caplan accuses of being incredibly dogmatic) come up with excuses. "Ability is hard to measure." "IQ doesn't fully measure ability." All true enough. These labor economists even come up with sophisticated models that make the ability bias correction shrink or go away completely. I've been following this discussion for years. From Caplan's description, it sounded like these labor economists were performing some kind of statistical sleight of hand to make an uncomfortable result go away. And then I picked up Mastering Metrics by Joshua Angrist.

The following passage stood out as being relevant to Caplan's disagreement with labor economists:
...our London School of Economics and MIT students tend to be high ability, at least in the sense of having high test scores and good grades in high school. On the other hand, some people cut their schooling short so as to pursue more immediately lucrative activities. Sir Mick Jagger abandoned his pursuit of a degree at the London School of Economics in 1963 to play with an outfit known as the Rolling Stones. Jagger got no satisfaction, and he certainly never graduated from college, but he earned plenty as a singer in a rock and roll band. No less impressive, Swedish épée fencer Johan Harmenberg left MIT after 2 years of study in 1979, winning a gold medal at the 1980 Moscow Olympics, instead of earning an MIT diploma. Harmenberg went on to become a biotech executive and successful researcher. These examples illustrate how people with high ability—musical, athletic, entrepreneurial, or otherwise—may be economically successful without the benefit of an education. This suggests that ... ability bias, can be negative as easily as positive.
 Then, a discussion of using IQ as a control in various regression studies to measure ability bias, done by one Zvi Griliches:
Although intriguing, it’s hard to see Griliches’ findings as conclusive. IQ doesn’t capture Mick Jagger’s charisma or Johan Harmenberg’s perseverance, dimensions of ability that are rarely measured in statistical samples. The relevant notion of ability here is an individual’s earnings potential, a concept reminiscent of the potential outcomes we use to describe causal effects throughout the book. The problem with potential outcomes, as always, is that we can never see them all, we see only the one associated with the road taken. For example, we see only the “highly educated” potential outcome in a sample of college graduates. We can’t know how such people would have fared if they’d followed Johan and Mick out of college. Attempts to summarize potential earnings with a single test score are probably inadequate.
I read this passage from Angrist's book and thought, "Okay, that's not totally nuts." So maybe high-ability people don't just disproportionately finish college. Maybe some of them anticipate that they can earn high incomes without going to college. Think Mick Jagger or Mark Zuckerberg or Bill Gates or Steve Jobs or Michael Dell. Ability bias can be negative. If the Zuckerberg/Gates/Jobs/Dell effect is large, the college premium can actually be larger than the raw average difference between college graduates and non-graduates. I think that an average reader can probably understand the passage from Mastering Metrics quoted above; it's in plain English without any abstruse mathematical modeling (though those details are in Angrist's book). So I made a note to keep it in mind and bust it out later when this "ability bias" discussion comes up again. And then I saw this exact quote from Mastering Metrics in The Case Against Education, right in the middle of the discussion on ability bias. Good on Caplan for this. He's not just saying, "Labor economists use econometric magic to make ability bias disappear, don't let them snow you." and then leaving the details to the readers imagination. No, he's spelling out in plain English the arguments used to deny ability bias. He wants his reader to understand what critics of ability bias are actually saying, so he can explain why they are probably wrong. He and I both independently identified this quote as the best summary of the "denying ability bias" argument.

I am not qualified to settle this argument. But the "ability bias is negative" story seems pretty implausible. Sure, there are a few celebrity superstars who quit college to pursue extremely lucrative opportunities. But by and large it is the individuals with higher ability who enter and complete college. By and large it is the lower-ability people who leave college early or avoid it entirely. I was there. I saw it happening in real time. Think about your high school and college cohorts. Think about who attended college and who didn't, or who dropped out and who finished. Does the "High ability individuals skip college because they know they can earn more on their own merits" story hold water? Is it even remotely plausible? Based on the hundred or so people I knew in high school and their subsequent education or lack thereof, the "ability bias explains much of the college premium" story makes a lot more sense.


Here is a great post with an early excerpt from his book; it's on his disagreement with labor economists over signalling and ability bias. A nice taste of what's in the full book.

Signalling and ability bias are completely different topics. I think some readers of Caplan's book might be confused by this, or might conflate these different items. Since I've been reading Caplan's blog for years, this came easy to me. But I remember a post where he lays out these very different explanations of the college premium: signalling vs. human capital vs. ability bias. It was confusing the first time I saw it. I've had years to digest these issues, so maybe it came easier to me than it would to an uninitiated reader. Or maybe the distinction is simple and I'm just dense, and the average reader will have no problem at all? A recent conversation with another reader of Caplan's book suggests that these really are difficult concepts. I suspect a lot of reviews will conflate signalling and ability bias.

Tuesday, January 23, 2018

Bad Examples of Net non-Neutrality Causing Problems

In a recent discussion thread elsewhere, this story was offered as an example of the bad things that can happen when we don't have net neutrality regulations. A broadband provider was blocking internet voice services, presumably to get customers to purchase its phone service. This does seem to be a clear example of the kinds of behaviors net neutrality advocates are warning us about. Touche?

Not quite. A few things struck me. It's old. It's from over ten years ago. So plainly they were not using Obama's 2015 neutrality regulations. The FCC had the power to stop this kind of behavior prior to those regulations. Also, the age of the example suggests the commenter had trouble finding a more recent example. Finally, the article itself makes plain that this is not a widespread practice:
Vonage's Citron said Madison River was the largest company to attempt port-blocking against Vonage customers. "We've identified one or two others that are very small," Citron said, adding that the information will be forwarded to the FCC. Many large cable companies have pledged never to engage in the practice.
Why was such an old example chosen? Aren't there more recent examples of this behavior? What is the canonical list? Maybe this one by the blog. The beginning of my post (this one you're currently reading) was a little unfair; I'm just picking on one anonymous commenter who chose a poor example to support his argument. So let's start with the FreePress list. Superficially plausible. It looks like some of these might be legitimate neutrality violations in the "monopolist throttling competitors" sense.  But then again some of these look more like "ISP's finding and throttling bandwidth hogs that are slowing down the network," which I will argue is a legitimate behavior that benefits customers (at least the customers who aren't themselves the bandwidth hogs).  Others look like security protocols that inadvertently blocked legitimate content, as any security protocol with a non-zero error rate will inevitably do. Here is a thorough fact-checking of the FreePress piece. Read them all. There is a non-cynical explanation for all of these (except maybe the Madison River example that I started this post with). At the very least it looks like the FreePress list made some glaring omissions. For the most part, ISPs changed their behavior as soon as customers started complaining, before the FCC could even respond. The TELUS example was literally trying to protect the physical safety of people being threatened by online agitators as part of a labor dispute. (Omitting details in which your sympathetic victims are behaving like violent goons shows really bad faith on the part of FreePress.) The overall narrative that this tells is that ISPs respond quickly to consumer complaints. They do sometimes throttle bandwidth hogs, but move quickly to try to accommodate them because that is how their customers want to use the internet! Sometimes they introduce security features or error-correction features that backfire, and quickly backpedal when customers complain. This looks to me like a free market working, and working for its customers.

Neutrality advocates should come up with some better examples. They need to distinguish between legitimate practices, legitimate mistakes, and true "throttling thy competitor" neutrality violations. Maybe there is a better, more thoroughly vetted list of true neutrality abuses. Feel free to share if you think you have that. My quick search for "list of net neutrality abuses" finds the same few examples being recycled over and over again. Sorry, maybe there's a legitimate worry here and I'm just too dense to see it. But this looks to me like much ado about nothing. "Net Neutrality: the solution in search of a problem."


Just to clarify. I didn't stack the deck by cherry-picking a list of poor, easily-debunked examples of net neutrality abuses. The FreePress link was my first hit in a Google search of "list of net neutrality abuses"; the link from HighTechForum debunking it is the third hit. Scolling down, I see basically the same list of "abuses" repeated in various forums. Presumably the FreePress piece represents a "best attempt" by some very motivated people, and it was (in my opinion) easily debunked with a cursory review of the actual facts. Also, I wasn't trying to set up a "straw-man" by starting with the Madison River story; I'm dragging the reader through the journey as I lived it, showing you what I found in roughly the order that I found it.

Friday, January 19, 2018

Queen Elsa's Economic Sanctions Against Weselton

[Possible spoiler for the movie Frozen.]

Was anyone else bothered by the end of Frozen? Queen Elsa tells the Duke of Weselton that Arendelle will no longer have any trade with Weselton. This is presented to the audience good-humoredly as a minor pathetic villain (the Duke) getting his comeuppance. But I'm thinking, Wait a minute. She just slapped economic sanctions on another nation. She probably harmed her own citizens in the process.

Did she enforce those sanctions? If carts or shiploads of goods from Weselton were already en route to Arendelle, did they get turned away? If Arendelle depends on trade with Weselton for its food supply, did Elsa allow her people to starve? If there are Arendelle merchants and craftsmen who depend on a steady supply of Weselton goods, did Elsa allow them to lose their livelihoods? What about smugglers? Let's see a follow up film, a short called Frozen Out, where a ship's crew gets hanged for running the blockade and smuggling in Weselton goods. Maybe include some footage of starving Weseltonians who lost their livelihoods because of the sanctions. Perhaps an interview with a hard-headed Arendelle nationalist who is glad to see Elsa "Sticking it to Weselton," but laments that lutefisk is so much more expensive than it used to be.

It's such a chipper, throw-away scene. "Ha ha! That Duke got what's coming to him!" Is the audience supposed to overlook Elsa's use of collective guilt?

For me this is right up there with "King Triton just happens to know a spell that makes the bottom half of a human lady" (like, did he have to practice that one a lot?) and "Belle spends the first ten minutes of the movie shitting all over her neighbors" and "When the guy is plucking feathers out of the sentient feather duster, what's actually happening to her?"

Wednesday, January 17, 2018

Arguments I Picked with Bryan Caplan

There are some libertarians who think the following:
Politics is dirty, dishonest, and downright wicked. I'll take no part in it. Picking the least-bad of two awful people feels sleazy. And I have no interest in the petty political intrigues involved in actual governing. 
There is this attempt to swear off politics. It comes in two forms: declining to vote as a citizen and declining to governing as an elected official or bureaucrat. I think prominent libertarians need to step up and get their hands dirty. Bryan Caplan expressed his distaste for voting here and his distaste for politics here. In his post about voting, he says,
I spend my time on many quixotic missions, like promoting open borders. So why not vote?
I respond:
Thank you for pointing out the inconsistency. There are a few economics bloggers who spill a lot of ink explaining why they don’t vote and giving the economic reasons for not doing so, the same ones you start your post with. I always think, “Gee, you spend an awful lot of time and energy trying to change people’s minds with clever arguments. If you were as selfish as your argument implies, you wouldn’t bother with all that. Maybe you can take your un-selfishness one step further and vote.”
 I think you should swallow your pride and vote. I know a lot of economically literate, libertarian-inclined people who don’t vote. I imagine I’m in a room with them all and I’m saying, “If we all vote, we’ll be a meaningful voting block and get more libertarian policies.” And each person says to me, “Yeah, it would be nice if we all voted. But see all these other people? I can only decide if *I* vote, I can’t stop them from shirking. Since my vote is such a small piece of the electorate, it doesn’t matter if I vote or not.” Each one responds to me with this “shirking” argument, and I keep trying to say, “No, I’m talking to all of you at once. And if we all vote at once, we’ll be a meaningful voting block.” It’s like being in a firm where we can’t get people to work because everyone realizes their own shirking won’t affect the final outcome, even though everyone recognizes they’d like the result if everyone else stopped shirking. We don’t have the tools available to a firm (like punishing, firing, or rewarding certain “workers”), but we have moral suasion. We can tell these non-voting libertarians they should vote because it’s the right thing to do. I don’t know how you think policy will tilt in the libertarian direction if you and people like you refuse to vote. As a prominent libertarian, your example might persuade a lot of people. A single vote might not make much difference, but if you persuade 100 others with similar politics to vote, that can be significant at the state, county, or city level.
 That’s the great thing about being economically literate. You can spot market failures but still decide to do the right thing anyway. Economics might teach you that it’s rational to be lazy/selfish and not vote, but it also teaches you that policy analysis and informed voting are public goods (since voting is like a common pool resource). We should try to learn the second part of that lesson a little better.
I make another comment later:
Suppose that by not voting you’re setting a bad example for your audience. A number of young, impressionable people see your talks or read your blog and are convinced by your arguments. But they are then put off by your refusal to vote. Some of them remain fully convinced of your arguments, but you persuade them not to vote. And some decide that you’re just not serious if you’re not putting forth the tiny effort required to vote, so you lose them completely. I want to ask how many such people would there need to be to convince you to vote? Is there a number? A single vote is small, but a room full of voters could sway an election, particularly at the local and state level.
 In this same vein, consider “Don’t vote but tell people you do” as an irrelevant third option, one of those tricks from behavioral economics where nobody really wants the third option but it makes the chooser flip their selection. (The other options being “vote and tell people you vote” or “don’t vote and tell people you don’t vote.”) You’d nudge policy in the libertarian direction if your “example” convinced a few hundred libertarians to vote, but I suspect your conscience would nag you. I think you’d like to have the example-setting benefits of voting along with the “trauma”-sparing benefits of not voting, but your conscience wouldn’t allow you to be that dishonest.
 If you’re an influential opinion leader, voting isn’t just about your single vote. It’s about setting an example.
Apparently this was one of my better ideas, because Caplan's co-blogger at Econlog David Henderson picked it up and made it the topic of a blog post, quoting my comment in full. Henderson had also responded to Caplan in another post.

I don't really care if Bryan Caplan votes or not, but I don't think prominent libertarians should go around telling the world that they don't vote. It's like announcing loudly to the major political parties, "Hey, go ahead and ignore this constituency. I'm probably representative of my tribe, and even if I'm not many will hear my case against voting and follow my lead." If the goal is to nudge policy in the libertarian direction, making public arguments about how much voting sucks is a pretty bad way of going about it. Another prominent libertarian blogger who I will not name chimed in at the time. I felt I had a good counter-argument, but that other blogger can be kind of a stubborn blowhard. My best case scenario was that this other blogger (not Caplan) would write another post explaining loudly why he was too good to waste his time voting, and how dare I even suggest he do so? (The Virtue of Silence is really hard.) Not wanting to bring on another public proclamation that libertarians are electorally irrelevant, I ignored him.

Caplan's other post was about disliking politics. For sure, politics is ugly. The dishonesty, the stupidity, the hypocrisy, all the anti-virtues required for effective coalition-building and policy-making are beneath him. I'm thinking, what if you get the anarchocapitalist world that you and I both want? Who is going to chair the various neighborhood associations, the community security agencies, the boards of private governance that replace public governance? Even if we get rid of all the things government currently does but shouldn't be doing, there will still be some legitimate "government" functions left for private governance to solve. Property disputes. Dealing with criminals. What is the libertarian playbook for this? What's the libertarian playbook for local government? Say, at the city or county level? Surely it's not a lame "Zero government!" stance. Some public goods problems are city-sized. The city government is the appropriate body for deciding these issues. If we started with anarchy on a city-sized population, they would eventually hit upon the idea of convening some council of representative decision-makers to solve city-wide problems. I make this comment on Caplan's post:
It’s a little bit uncomfortable to hold all these policy views without giving much thought as to how to actually govern, isn’t it? I’ve thought about this: suppose I were to get active in my small local government. What’s the libertarian playbook for that? Tear down city hall? I don’t think so. There are real collective action problems and externalities at the town or county level, so someone has to govern. The libertarian solution to government, “privatize everything,” just shifts the problem to some other city-sized entity. I’m all in favor of privatizing the things that government has no business doing, and I think this means not having large national or state-level governments (except for nation- or state-sized externality problems, possibly not even then). But at smaller levels, *someone* has to govern, be it an actual government or a private manager.
 I’m imagining a meeting of a neighborhood association trying to set the ground-rules for, say, parking a trailer on the street. And the libertarian in the group says, “Don’t worry! We don’t actually need to adjudicate this problem. Coase showed that the disputants will come to mutually agreeable terms regardless of how the problem is adjudicated.” And he doesn’t realize that he’s actually in that conversation between disputants. Politics, even the politics of a private organization, is sometimes dirty, but someone has to sit down at the table and hammer these things out. The free market doesn’t do it for us. All that said, I personally share your distaste for politics. It’s just that sometimes these argument slip into a facile “the world optimizes itself” mode when the person making that argument actually needs to do something...
There are clear-cut cases, but then there are also some borderline cases. Imagine a zoning dispute in a small town. Someone wants to build a business, but the residents say it would destroy property value and cause unsafe traffic around where children ride their bikes. Is this just pure NIMBY-ism? Or do the residents have a legitimate grievance? We could say, “Let them build their business and let the residents sue if they want,” but that’s a dodge. The local government might be the best positioned, with the most relevant local knowledge, to resolve the conflict at the lowest cost. Another one: Should the small town privatize the roads? Or should the local government see itself as a public trust set up to manage a common property? For a large enough city, privatizing might make sense. But for a small enough town, it makes more sense for city hall to actually manage the property. Which invariably leads to all the nasty political behaviors Caplan discusses above.
 I very much like the idea of moving things from public to private governance, but even if we do that it ultimately falls on *someone* to actually govern. 

I'm not one to talk. I apparently can't be bothered to attend my neighborhood association's monthly meetings. (That's partly a function of having three small and demanding children, but I'd make some sacrifices and attend if it became worth my while.) But libertarians should probably take some of these questions a little more seriously. There are a few "Tear down all power structures!" libertarians who find anything that looks like a government intolerable, but I think these libertarians are not very intellectually serious. Someone's going to have to govern. Someone's going to have to do the sucky job of adjudicating disputes between bickering neighbors. Libertarians need to give this problem more thought. (Read Governing the Commons, or anything else by Elinor Ostrom, on the question of private governance and the management of common pool resources.) Some of them may actually need to join existing governments to make any relevant progress. Maybe not me. Maybe not Caplan. But we can't all just put out our hands and say "Not me!" and then expect the world to stop trying to "govern" us. There's  no elegant way to opt out of this. You may not take an interest in politics, but politics takes an interest in you!


It's weird to have disagreements with someone like Caplan, with whom I 99% agree with on policy. (Note there is a 1% margin of error in this estimate.) I feel like there are a few points of philosophy where I profoundly disagree with him, but no real disagreement regarding what official government policy should be. On another note, I picked up his latest book The Case Against Education and will be devouring it over the next few days and weeks. On another another note, I wish Caplan would respond to his readers in the comments. I feel like I had a good argument with respect to voting, a feeling confirmed by his co-blogger David Henderson piling on. It would have been nice to have an official, "Meh, I dismiss this out of hand" or "That's a good point, I'll think about it" or "Okay, I'll actually start voting now." Instead, crickets. I'm nit-picking here, but this is one way Caplan's excellent blogging could improve.

Tuesday, January 16, 2018

The Economics of Monopoly and Net Neutrality

Advocates of net neutrality have an inaccurate model of how monopolists behave. Scenarios are often suggested in which a media conglomerate partners with an ISP and throttles bandwidth from "anything that isn't us". I find these inconsistent with a basic economic analysis of monopoly behavior (not to mention a little paranoid). Note I'm not saying something like "Corporations aren't greedy" or "market competition solves all problems." I'm assuming for the sake of argument that corporations are greedy profit-maximizers, and I'll assume further that the ISP has a monopoly plus some kind of prospective partnership with a media company which could conceivably benefit from selective throttling.

I won't give you a full theoretical treatment of the economics of monopoly. That would require a chapter or so out of a good microeconomics book. (Do pick up Steven Landsburg's Price Theory if you're curious about this. Or David Friedman's book is free online; here is the chapter on monopoly and oligopoly.) But I'll start with a helpful illustration from an old post at

Snidely Whiplash owns all the housing in an isolated region, the Yukon in this example. (Presumably Landsburg chose the Yukon to imply that it's costly, though not impossible, for the residents to move away. Thus Snidely's monopoly represents real market power.) All tenants are identical. Snidely eventually figures out how to extract all of the consumer surplus for himself. "Consumer Surplus" is the difference between what you'd be willing to pay and what you are actually charged. Say the tenants are willing to pay $10,000 max to live in the Yukon, but only have to pay $7,500. They reap a surplus of ($10,000 - $7,500 = ) $2,500, because they are paying $2,500 less than what they actually value their housing at.

If Snidely is a monopoly supplier of housing, he'll eventually capture all of that surplus. He can keep charging more until people almost move out, or he can use some kind of clever scheme to get people to reveal how much they value their housing. If he charges $10,001, everyone leaves. If he sets rent at $10,000, he captures all the surplus for himself and everyone stays. Snidely has a good thing going, assuming he can figure out this sweet spot.

Now Snidely monopolizes the grocery stores in the Yukon. Should he try to extract the consumer surplus using his grocery monopoly? The answer is a clear "No." Remember the residents are almost ready to leave, because he's already extracted all the consumer surplus from the housing market. If he tries to extract the consumer surplus from their grocery purchases, that will be the last straw and they will leave. He can get them to stay by compensating them for the surplus they've lost, but he must pay them more than he can extract with his grocery monopoly. (Do read the Landsburg post, which lays this all out very clearly.) If he manages to price-gouge at his grocery store and extract, say, $20 worth of extra payments from his customers, he'll have to turn around and pay them more than $20 to convince them to stay. 

Okay, now let's say instead of housing and groceries in the Yukon, Snidely monopolizes broadband internet. Suppose again he's serving a market of identical residents and extracting all the surplus. (We can relax these assumptions later. It's just a simplification so we can wrap our minds around the example; this argument doesn't hinge on it.) His internet customers value internet at $100/month, and that's what he charges. Any more and they'd all cancel their subscriptions. He's the internet service provider, but he's also the cable and phone company. One day he says, "I'm going to throttle Netflix so that people buy those $4.99 'watch instantly' rentals through their cable box. I'm also going to throttle Skype and Hangouts so that people will buy landline phone service or sign up for Snidecast's internet voice-and-video service." He gives his mustache a good twirling.

But wait! He was extracting the full surplus from his internet subscribers. He was charging $100 for something his customers value at exactly $100. If he throttles commonly used websites, he'll lower  the value of the internet to his subscribers (to, say, $90 or perhaps less) and they'll all quit en masse! If he throttles certain websites that his customers use, he'll have to give them a lower price. If throttling lowers the value to his users to $90, then that's the most he can charge. He'll have to be confident that he can pick up an additional $10/month by directing people to his brand name services, just to break even.

I think it's hard or impossible to make this work out for Snidely. The internet is one big bundled good. Any throttling of his competitors on the internet lowers the value of the overall bundle he's selling. This necessarily lowers what he can charge to his internet subscribers.

Suppose you relax the assumptions. Internet customers aren't identical. They all place different values on their internet service. That's fine. Monopolists can often engage in price discrimination, which means offering lower prices to customers with lower willingness-to-pay in order to attract those customers and offering higher prices to customers with higher willingness-to-pay in order to extract more surplus from them. Businesses can construct clever schemes to get people to reveal their willingness to pay. Cable companies often offer lower "new customer" rates to their subscribers, and they often extend this rate to repeat customers who are willing to call in and whine about their cable bill. Student and senior citizen discounts are other examples. Sometimes this is very subtle. I discuss other examples here. At any rate, relaxing the assumption of identical customers doesn't change anything if we suppose that Snidely can do some kind of price discrimination. Maybe there is one population willing to pay at most $50/month for internet service and another population willing to pay $100/month. The ISP can figure out who is who, through a combination of basic market research and clever "special offer" schemes. Supposing there are gentle gradations in "willingness to pay" rather than two discrete populations: some will pay $50, some $51, some $52... up to, say, $200. We can still suppose that the ISP has some clever method for price discrimination and can extract the consumer surplus for itself.

Now suppose we relax the assumption that the monopolist is already extracting the full surplus. "Okay, now there's some room to play!" Snidely rubs his hands together. Now he has some leeway to gain by throttling his competitors...or he could just simply raise the price for internet subscription. He could concoct some elaborate scheme to direct internet subscribers to his phone and movie services. Or he could just charge a few more dollars for internet service and call it a day. Too many things have to go right for the "throttle competitors" strategy to actually work. If the monopolist throttles Skype and Hangouts, maybe internet users just use the third best option or use their cell phones to make actual phone calls. If they throttle Netflix and Hulu, maybe internet users go to Youtube or watch TV (which doesn't do the cable company a whole lot of good, given the fixed monthly rate). Or maybe they break out their physical DVD movies and box sets, or rediscover Family Video and Redbox. (Hmm...there used to be a service that would mail you DVDs and you'd mail them back when you were done watching them. It had a much better selection than that movie-streaming service that everyone's using now.) Maybe they even decide to keep watching their slightly slower Netflix and slightly less reliable Skype. Throttled internet users may end up spending money to get what they were previously getting out of their internet connection, but there is no guarantee that they'll be spending those dollars on the monopolist's preferred provider. It makes a lot more sense to simply raise the price of an internet connection. "Throttle my competitor's services so they will buy mine" is an incredibly precarious strategy. It depends on too many things going right. For the strategy "Throttle Netflix so customer will rent more Comcast movies" to work, Comcast has to be the customer's second most favored option after Netflix. That may well be true for some of the ISP's customers, but fat chance it's true for most of them. Rather than foreseeing and selectively throttling all of the customer's many alternatives, the ISP would do better to just raise their monthly rates. This could entail a general rate hike or raising rates selectively by getting better at price discrimination. And to get the highest possible price, the ISP will want to maximize the value of an internet connection to its customers. That probably does not entail throttling popular websites.

The basic problem here is monopoly per se, not the implausible scenarios illustrated by neutrality advocates. If ISPs are actually monopolists, then they can extract most of the surplus from their subscribers. Granted that's a problem if you're an internet user. However, they're more likely to exert that power in the form of higher monthly rates than sinister self-serving throttling of competitors.

I want to reiterate that I don't think ISPs are monopolists in any meaningful sense. This is important because ISPs can't do all of those nasty non-neutral things if they aren't a monopoly. You can get a pretty good data plan through your smartphone. You can get the non-internet versions of things: newspapers, DVDs and books (for free) from your local library, Walmart instead of Amazon, talking to people on the phone instead of over Skype. It's slightly less convenient, but not exactly devastating. Alleged monopolies are always too narrowly defined. A "monopoly" on broadband internet competes with other kinds of physical media; if one gets too expensive people will substitute in others.


Some unconnected thoughts on this topic below.

I think David Friedman is trying to make this same point here in a Slate Star Codex thread. Another commenter totally misses the point. Excerpts:
DF: They could give their movie firm an advantage with their ISP customers by charging high prices to their competitors, but why should they?

Anonymous commenter: Because they could easily dominate the online movie market and make way more money that way?
Ugh. Sometimes you have those "why even bother" moments. The conversation is instructive, anyway.

I have quite a lot more to say about net neutrality here, with a lot of overlap in this post you're reading now.

Recall there are historical examples of people offering an exclusive, non-neutral internet connection and the market breaking them down. ISPs eventually learn that customers want a neutral internet, and it's easier to maximize the value of the internet subscription and just charge some fixed rate for it.

The Landburg post really is brilliant. If it's unclear on an initial reading, read the comments. Someone was probably as confused as you are and asked your question. This comment by Landsburg hit the mark, at least for me:
Yes, someone with a double (vertical) monopoly has no more power to abuse the market than someone with one.

The easiest way to see this is to consider a monopolist who owns two toll booths, one at each end of a bridge. You’ve got to go through both booths to get to the other side.

This monopolist is no richer than a monopolist who owns just one toll booth on an identical bridge. Either of them will charge you (in total) what you’re willing to pay to get to the other side.
Riffing on the monopoly bridge-owner. Imagine someone who monopolizes the bridges to some island, which contains an awesome shopping center. Will they try to get people to buy Bridge Corp brand clothing and books and groceries once they're in the shopping center? Will they strategically sabotage other brands, staining their clothing, running magnets over their computers, relegating them to a dark corner of the shopping mall that never gets cleaned or checked by security? Probably not. They'll probably say, "We're good at building bridges. That's our comparative advantage. Let's maximize our revenues from the toll booth. Let Starbucks, the Gap, and the Apple store specialize in coffee, clothing, and computers." Everything they do to hamper their competitors (or the competitors of a company they hold a sinister partnership with) decreases the overall value of the shopping center, and thus reduces the toll they can collect at the bridge. ISPs are essentially monopolists on the bridge to the internet (at least in the world of net neutrality).  Lots of stores carry their own brands for sale; they usually don't make the other brands hard to find because doing so would lower the value of the overall shopping experience. They could make more revenue by selling more of the store brand product if all else were equal, but all else is not equal.

It's worth reiterating that some "non-neutral" behaviors are good for customers. Identifying and throttling the big bandwidth hogs on my network is good for me, even if it means I'm occasionally the one who gets throttled. Offering tiers of service and internet fast lanes is also good for consumers. It gives the ISPs incentive to build new infrastructure. They can reap a temporary premium for their "fast lanes" until the fast lanes become the normal-speed lanes, at which point they build another fast lane. Despite all the griping about potential throttling, internet connection speeds are increasing exponentially. Anyway, it's important to distinguish between "throttling bandwidth hogs because they're slowing down the network" and "throttling Netflix because I have a deal with Hulu." 

Sunday, January 14, 2018

We’re Number 2!

Apparently a search for "opioid epidemic debunk" on turns up a post from my blog as the second hit. By the way, that is by a wide margin my most read post. I'm rather proud of it.

A search for "climate sensitivity publication bias" turns up one of my posts in the fifth position (not counting the ad at the top). Not as well read, but I'm proud of that one, too.

Not exactly viral news, but not bad. These are narrow but important topics. It's nice to know someone researching these topics will come across something I wrote. Supposedly Duck Duck Go doesn't track anything on my computer, so it's not up-rating these posts in the search results just for me. I'm not quite sure what Google would turn up. In a Google search in an incognito window, I'm getting 4th place for "opioid epidemic debunk". For "climate sensitivity publication bias" I'm at the top...of the second page. But the fourth hit is a Ricochet post written by a friend of mine, linking to my blog. The 1st, 2nd, and 3rd hit are links to the two papers I discuss in my post.

Two cheers for small victories.

Tuesday, January 9, 2018

Markets Break Down Internet Non-Neutrality

In his book WTF, Tim O’Reilly tells the story of MSN and AOL in the early days of the internet (well, the mid- to late-90s anyway). Both were trying to be exclusive content providers, or “walled gardens.” Both failed when they realized that their customers wanted access to the broader internet. In The Fallacy of Net Neutrality, Thomas Hazlett argues that the same thing happened in the Japanese market for internet service providers.

(There is a short narrative description of the MSN/AOL walled garden episode in The Rate and Direction of Inventive Activity Revisited on Google books, page 647; you should be able to find it free online.)

This might have been a good opportunity for O’Reilly to point out the implications for the wider “net neutrality” argument, but he declined to do so. I know, I know, Microsoft and AOL weren't literally ISPs in the sense of supplying and maintaining the physical infrastructure. They weren’t natural monopolies like the cable company. But the episode shows that big players can’t simply throw their weight around and run roughshod over their customers’ preferences. These were effectively internet choke points at the time, and the major players failed to exploit their supposed market power. They tried to constrain customers to their walled gardens, but were unable to.

If you use any of those programming books with animal drawings on the cover, Tim O’Reilly is that O’Reilly. Some of my readers can probably crane their heads to their bookshelf and see a few books published by his company. Many of his books have added tremendous value to my life. WTF was not one of them. The book has some terrible economics in it, which I may discuss in a future post.

Anti-Market Paranoia On Full Display

This recent Econtalk with Matt Stoller was interesting. I wish I could say I learned something from it, but unfortunately Stoller was far too emotional and his arguments were poor. It is sometimes interesting to see facile anti-market leftism in plain view.

Stoller thinks that Amazon is deciding what products are available for sale, rather than selling the products that people want to buy. He thinks that Google and Facebook are deciding what kind of content you should be viewing, rather than trying to predict what kind of content you'd like to view and trying to match your expectations.

First off, Google, Amazon, and Facebook are emphatically not monopolies. I have literally price-shopped on Ebay, and despite the mild hassle of using a website I'm less familiar with that doesn't have my credit card on file, I bought from Ebay because the price was lower. I've done this numerous times, even though Amazon is my default. Amazon has a monopoly on online shopping in the same sense that MSN and Bing have a monopoly on the attention of senior internet users who don't know how to change their home page.

During the interview, Stoller claims implausibly that Bing and DuckDuckGo aren't adequate substitutes for Google search, but both give perfectly serviceable results. Whenever I've compared the two, or used Bing because it was the default homepage and I was lazy or curious, I've gotten perfectly good search results. I really don't know what he has in mind.

Facebook appears to have the market cornered on social media, but of course there are substitutes. Orkut, Google plus, LiveJournal, Twitter, Instagram, blogspot. Or good old fashioned e-mail and texting, like our hardy pioneer forefathers managed to get by with. Some people I know aren't on Facebook, and several have left it. Clearly people can do without.

Russ Roberts tries to correct Stoller, pointing out that consumers have vastly more options for books and (near and dear to my heart) craft beers than they did even two decades ago. Stoller responds to the point about books by implying that most new books are low-quality books about fart jokes. He responds to the point about craft beers by saying that a lot of them are owned by big corporate conglomerates. (?!?) Rather than contend seriously with a challenge to his argument, he seemed content to play the part of the sneering elitist. If I were to repeat Stoller's argument, I would feel like I'd failed an ideological Turing test. I really don't understand his point. Amazon doesn't decide what people will buy. For the most part its search results show people what they're looking for; there is very little latitude to manipulate this in Amazon's favor. At worst, Amazon can decide not to carry a product, and the buyer will have to go elsewhere to get it. It's kind of implausible that someone who is deciding which book to dedicate 10-20 hours to reading will just say, "Meh, I'll take the top hit of this search and just bury my face in it." Even if Amazon downgrades a book in a search because (for some reason) it doesn't want people to read it, readers who want that book will find it without too much trouble. Anyway, I'm not sure what the "solution" is to Stoller's problem. Should Matt Stoller be deciding which books are on offer? Should he be the one manipulating the ordering of search results, thus directing people to more meritorious books and less meretricious ones? I don't know how to satisfy his concern without doing some version of "Government agency decides which books have merit and which don't, and uprates/downrates accordingly." Or maybe he's fine with a market-based solution to the problem. Perhaps he just wants more options in the marketplace (

Stoller thinks that these "monopolies" are shaping our preferences and telling us what to buy and read. I think, at the very most, these companies are moving along our indifference curves, not trying to shape our preferences.

Listen to the podcast, and read the comments section. This was one of the longer and more enlightening comments sections I've seen on Econtalk. Many people chime in to comment on Stoller's weak arguments and correct his factually mistaken examples.


Economists have this really neat concept of indifference curves. Suppose I'd like 2 pants and 2 shirts. But I'd be just as happy with 4 pants and 1 shirt, or 7 pants and 0 shirts. It's best to have 2 of each, but give me enough shirts and I'll give up a pair of pants. You see this kind of declining marginal value with any paring of goods. (The idea here is that each additional unit of something is worth less than the last one. So to get me to take "all pants with no shirts", you have to give me a lot of pants.) You can plot these indifference curves in 2 dimensions (or more). Maybe the points (7,0), (4,1), (2,2), (1,4), and (0,7) describe one indifference curve. If you had more resources, you'd prefer more of everything and you'd be sitting on the curve defined by points (12,0), (8,1), (5,2), (3,3), (2,5), (8,1), and (0,12). I think Amazon, Google, and Facebook at best can nudge us to a different point on an indifference curve. That's not at all frightening to me. I think Stoller is trying to tell us that these companies can reshape our indifference curves completely, or compel us to spend more thus pushing us out to a different indifference curve, or that checking beyond the first few hits on a search represents a tremendous resource constraint for typical shoppers. I find this all very silly.

Monday, January 8, 2018

Nobody Ever Gets Bad News On Time

People are always annoyed at getting bad news too late. And it's always too late. There is this outraged “Why wasn’t I told sooner?” tone. Whenever I hear this I think, “So, you want to be constantly deluged with false warnings?”

Think about the chain of events that leads to bad news being disclosed. Something bad might or might not have happened. Initially the problem is discovered by some low-level worker bee, perhaps someone not competent to judge the scope or scale of the problem. They have to disclose it to someone else, who must prioritize the issue. Some due diligence must be done to determine the extent of the problem, or whether it’s a real problem at all. Perhaps there are several rounds of this before the bad news makes its way up the chain to an important decision-maker. Someone with authority has to assemble the facts and craft the narrative: what happened, what are the implications, what are we doing to solve it, whose fault was it, etc. Disclosing too early means some part of this narrative-crafting is not done, and thus the disclosure elicits even more outrage and confusion than if you’d gathered all the answers first. 
So what does this mean? What are you doing about it? Then why even tell us?
If all potentially bad news were disclosed extremely early, we’d end up with a lot needless panic. Maybe some important items would be disclosed earlier, but then someone would have to mop up after all the wrongful disclosures, too. “No, that wasn’t actually a problem. No, that’s working fine. No, that was also a false alarm.”

How should you announce that you’ve put an unsafe product on the market? Announce right away, before the extent of the problem is known, sowing confusion and chaos? Or announce when you understand the extent of the problem, which units are damaged goods and which ones are fine and which ones you’re going to replace just to be safe even though they’re almost certainly fine?

 How do you announce layoffs at a company? Tell everyone, “Some of you won’t be here in a few months. We’re just not sure who yet.”? Or carefully, deliberately sort out who will keep their job and who will be let go, and announce it all at once? Do you give everyone updates on their layoff likelihood? “Matt, you’re at 10%... Oops, looks like you’re up to 50% today.”

I think this full-disclosure world would be needlessly stressful and costly. Prices would be high because unnecessary product recalls would be happening at the drop of a hat, and work would be stressful because you’d always have this executioner’s ax connected to a roulette wheel over your head.

Most people don’t actually want to live in that world. But people do want to preserve their right to be sanctimonious. People love having legitimate-seeming reasons (actual reasons!) to despise their enemies. And of course lawyers love having plausible rationales to sue. So I suspect “Why didn’t you tell us sooner!?” is here to stay.


 Sometimes a delayed disclosure really is motivated by cynicism or moral cowardice or simple poor decision-making. If you were looking for it, there’s my hedge. I just think it’s hard to separate the wrongfully delayed disclosures from the prompt disclosures in real time, even though it often seems so easy in retrospect. 

"On Time"? "In Time"? Couldn't decide which sounded right. Interesting discussion of uses here.

Sunday, January 7, 2018

Advice That Sounds Like "Always Cooperate"

David Henderson wrote this post about how to get rich in America, taking a list from Dwight Lee and Richard McKenzie's book Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life. I read the list and agreed with it. But later I had doubts about number 5, "Get married and stay married." I'm sure that people who do get married and stay married tend to be richer and save more wealth. Getting married tends to make you follow the other seven rules. (I had read these posts years ago when Henderson first published them, and I thought about it again recently when I read his book The Joy of Freedom. Highly recommended, by the way.)

But this advice is a bit like saying, "In a prisoner's dilemma, you should always cooperate." "Get married and stay married" is great advice if both spouses are doing their part. But what if one isn't contributing? What if a spouse is abusive? Unfaithful? Alcoholic? Fails to do any of the house work? Fails to find adequate employment (without any offsetting home-making effort)? Mistreats the children?

It reminds me of a passage in Steven Pinker's book Better Angels of Our Nature. There is a long exposition about how wonderful it would be if humanity did away with war. We would no longer have populations ravaged by warfare (the violence itself and also the resulting disease and starvation). We'd also enjoy tremendous cost-savings as we'd no longer need to sacrifice a large portion of economic output to maintaining a standing army and producing war machines. Our standing armies could go home and man the factories. If only we'd beat our swords into plowshares, humanity would prosper! And at the end of this Pinker says: One reason this doesn't work is the 'other guy' problem.
If a nation decides not to learn war anymore, but its neighbor continues to do so, its pruning hooks will be no match for the neighbor’s spears, and it may find itself at the wrong end of an invading army.
 "Peace with disarmament" is a great option if everyone else is cooperating. Just like "get married and stay married" is great advice if both spouses are contributing. But dammit, there's that "other guy problem" to contend with! Proselytizing individuals (who can benefit from unilateral action) can be productive, but proselytizing groups (even groups of twos) to act collectively is sometimes like preaching to the dead.

I'm  happily married, and I feel like we both share equitably in the bread-winning, child rearing, and the home work. I've seen marriages of my friends fail, and initially I'm always sad to see it. Ending a marriage is never a nice thing. But I assume that for most of those divorces, continuing the marriage would have been sadder than ending it. Perhaps one spouse was unfaithful or emotionally abusive. If there was no sign those problems would get better any time soon, why continue such an unpleasant partnership?

I don't know if there's a solution to this problem. Usually when two parties want to constrain each other's behavior for some kind of joint venture, the solution is some kind of contract. Marriages do involve a a contract, albeit a standardized, boilerplate kind of contract. Suppose a marriage contract specified doing equal shares of work in the home, or acquiring adequate employment outside the home. Who adjudicates disputes? How do you gently broach the topic of a spouse failing to meet their contractual obligations (without it sounding like a hostile ultimatum)? Supposing you get a magistrate to rule that, "The husband will do a greater share of the house work!" How do you enforce this ruling? What kind of penalty can you impose on the husband that doesn't also harm the wife and the children? This is a very small-scale collective action problem with the minimum number of people required for it to be "collective," and yet it seems like one of the most intractable social problems.

Maybe "better matching" is part of the solution. But here's a cynical thought: some people are just damaged goods. Lazy. Emotionally immature. Manipulative. Unpleasant. Good partners will tend to get matched up with similarly good partners. Mediocre partners will likewise be able to "purchase" a mate of similar quality in the marketplace of couple-hood. We can try to encourage match-ups of people who share bad combinations of emotional immaturity, unpleasant personality, low earning-potential, and other traits. Surely some of these marriages will be happy and full of mutual heart-felt love. But many will be doomed to fail, condemned by inherent character flaws that no amount of love will fix.

Don't get me wrong here. Maybe some couples (more to the point, some individuals) really should try harder to fix their marriages. Maybe some of the divorces I've seen wouldn't have happened if one or both partners were able to "stay the course" through a rough patch. Not to second-guess any couple's decision to separate, but I suspect some of them could have worked it out if they'd wanted to. Splitting a family has obvious financial consequences. Suddenly the family needs two separate households instead of just the one. Also there are wasted resources and wasted time carting the kids around from one spouses house to the other. There can be destructive competition for the children's attention, including legal battles over custody and visitation rights. There can even be mean-spirited wealth-destruction or hedonistic consumption of savings, because "If I don't spend it the other spouse will." (I know, it makes little sense, but I once heard a divorced mother explained this dynamic playing out after her marriage ended.) It's better to avoid these costs, if practical. My point in this post is that avoiding those costs requires a joint effort, and sometimes one partner to that effort is unwilling.

"Get married and stay married." Great advice if you can take it. Just like "Always cooperate" is a great equilibrium in a prisoner's dilemma. I still think it's good enough advice that it's worth sharing. It belongs on the list of 8 from Henderson's post. Maybe the person who hears it is the problem spouse in a marriage, and hearing this advice s/he is finally motivated to clean up his/her act and fix their marriage! Unfortunately, there really are some problems that you can't unilaterally fix, and some advice you can't unilaterally decide to take. (Cue hit 90s pop song misusing the word "ironic." Gah! Sorry, couldn't help myself.)


I wrote this entire post on the "stay married" part of the advice. Then it occurred to me that many people have enough trouble with the "get married" part. This is also good advice that plenty of people would love to take, if only they could. Alas, the "get married" part also requires some degree of cooperation from a willing participant. Maybe the book Getting Rich in America gives all the appropriate hedges, but I have a feeling that a lot of burned ex-spouses or unrequited lovers read "get married and stay married" and think, "Yeah, tell me something I don't know."

Career Tribalism I Do Not Understand

Occasionally I see stories about actuaries who behave unethically or even illegally. I don't feel any urge to leap to their defense. I have no impulse to shout down all criticism. I don't feel the need to explain to the silly uninitiated public that you can't make actuaries accountable for their financial estimates and opinions because some things are unpredictable and subject to chance. I think, "That's outrageous and contrary to the public interest. That person should be punished, perhaps jailed."

Some of these stories involve some kind of accounting fraud. A government actuary signs off on an unsound, underfunded public pension. Perhaps they use a life table from the 1970s, thus understating mortality and thus understating the total liability of life-long pensions for retirees. Or they use an absurdly generous discount rate, assuming the fund will earn 8% on investments forever, rather than responsibly discounting liabilities at the risk-free rate. (This is how my home state of Illinois has fraudulently accounted for pension liabilities for decades.) Or maybe they are less sophisticated about the deception and sign off an an unsound pension fund. The real hit doesn't come until decades later, when the fund suddenly becomes illiquid and retirees stop receiving their checks.

I would say the actuary in these cases acted unethically. Sure, the government, perhaps bowing to a public employee union leader, shopped around for the shadiest actuary they could find. Inevitably they find someone who will invent a paper fiction by which to cram oversize liabilities into the Procrustean bed of inadequate revenues. Even if this result is sort of inevitable, I still say the actuary who signs off is unethical.

So I don't understand why police officers, teachers, and medical professionals are so defensive when one of their tribe gets publicly shamed for malfeasance. You see the same thing when someone suggests measuring and rewarding good performance. There is this weird defensiveness that "performance is impossible to measure."

"You can't scrutinize how police respond with violence," says the police, "because scrutiny even of a bad actor will incentivize the wrong response when another situation appropriately calls for the use of force." There is certainly something too this. You have to strike the right cord of balancing false positives and false negatives. But the reaction is far too strong, and in some instances cops stridently defend incredibly poor judgment. You have to hold some of these people accountable. The impulse to jump to the defense of every bad actor makes cops looks sleazy, like they are anticipating the need to cover their own bad behavior.

"You can't scrutinize teacher performance," say teachers, "because children are responsible for studying and learning, and some students don't do their parts." There is a version of this for the medical profession, too: "You can't scrutinize doctor performance, because patients so often fail to follow doctors' instructions." Of course, it would be foolish to hold these people responsible for any given pupil's failure to learn or any given patients failure to improve. But to say you can't average over a large population of students and measure the "value added" of a teacher? That's kind of implausible. Same with a doctor or clinic, treating thousands of patients a year. "Selection effect!" you say? As in, good teachers get sent the best pupils, and conversely good doctors get sent the worst patients. That's why you measure "value added", not merely value. You don't just measure, say, test scores for pupils or health status for patients. You measure these things against some baseline expectation. If school masters in third-world countries can measure the competence and dedication of their teachers, a developed country like the United States can figure out how to do the same. It should be easier, not harder, with modern computers, databases, and a well-funded bureaucracy. (By the way, even notice the tension between "You can't measure teacher quality" and "You have to have this certificate to be a qualified teacher in this state"? One wants to ask, "How did you figure out the things you need to know to be a qualified teacher? Did you somehow measure teacher quality and figure out what characteristics drive it? Or did you just make it up?")

It's possible that I may one day sign off on some fund or reserve estimate that is fundamentally unsound for reasons beyond my comprehension. Or I may build a predictive model that isn't truly predictive; it fails for reasons I can't anticipate. I hope these events, if truly isolated, wouldn't lead to the end of my career. But if someone uncovers even a single act of gross negligence, deliberate deception, or a pattern of repeated failures due to incompetence, I hope I would be punished for it. Most people want some level of scrutiny and responsibility for outcomes, so they can be rewarded for doing a good job. Denying any responsibility for outcomes looks suspicious, to say the least.

I'm not quite sure why other professions act so clannish. Maybe they are public or semi-public employees and can thus afford to completely insulate themselves from the scrutiny of their customers? Maybe because they are powerful and sympathetic interest groups, and they form constituencies that politicians cater to? Certainly, McDonald's, Walmart, Ford, and Merck can't afford to say, "We're not responsible for quality" or "We're not responsible when things go wrong." McDonald's and Walmart have to anticipate the worst behavior of the very worst 1-in-a-million employee, at the very bottom of the distribution, on his worst day of the year and say, "We're going to see this happen once in a while. We've got to try to prevent it, or at least own it when it happens." Ford and Merck have to anticipate the 1-in-a-million dumbest use of their product by the very dumbest user on his worst day, and then own the problem that isn't really their fault. They have to make the product safe, not just for the average user, but for the very worst leftmost-tail-of-the-distribution user. If you have a government job (teachers, police) or are paid on a government-set payment formula (hospitals and clinics), your best bet is to sit tight and argue that problems aren't your fault. I think that explains at least some of the clannishness.

Saturday, January 6, 2018

Tight-Lipped Subordinate

There's this dynamic that plays out between bosses giving instructions and subordinates receiving them. Or perhaps sometimes its the other way around. Sometimes it's the boss or an equal (say, one spouse subverting the other spouse's plans) who does the thwarting. It goes something like this. After a discussion of what needs to get done:

“…So, do you understand all those instructions?”
“Great, so you know what to do now, right?”
(Thinks about it.) “Are you silently coming up with reasons to veto everything I just told you?”
“So when we meet again, your stuff won’t be done, I’ll be disappointed, and you’ll have a list of excuses?”
“That’s the plan!”
“Is there any way I can get you to tell me those various road-blocks and excuses for failure ahead of time so we can address them?”
“Nope. That would be telling.”
"Is there any way I can monitor progress before our next meeting, so I can avoid another meeting where I ask you about your progress and nothing is done?"
"...What was that? Sorry I was looking off into space, hoping you'd get bored and lose interest in this topic."
“Alright, see you again next time for more of this bullshit!”
“Cool! Looking forward to it. See you then!”

If you're in charge of getting someone to do something, be it a child, employee, boss, coworker, spouse, etc., you've probably had this experience. The person agrees that X  should get done, but has all kinds of reasons why it won't. Maybe it's "I'll e-mail Jim in IT, who will ignore my e-mail. I can say I did my part, but it will be someone else's fault." Or "I'll agree to do this task, but prioritize it below everything else without saying so. It'll basically never get done, because it will never be a top priority." Or it's something that you can't imagine, so you can't anticipate it. If only you could get the person to describe the obstacles, you could figure out a solution and get the task done. But the person assigned to the task anticipates this and keeps tight-lipped. It's like having this guy working for you (or with you). Maybe it's subconscious or unintentional, but you get the feeling that the person it playing this deeper game of "avoid unpleasant task." This can be avoided if both parties air their expectations and try to get them aligned, but one or both parties may want to avoid this confrontation.

Sometimes the boss may feel this is happening, but really he's being a bad boss and not giving clear enough instructions. It's still a responsible employee's job to pipe up and say, "You didn't give me what I need to do my job." 

Friday, January 5, 2018

Fatal Drug Interaction or Incidental Co-Occurrence?

Here's a question that was asked to me by a frequent correspondent in an e-mail:
One quick comment on your post and related conversations: You often emphasize the issue of drug interactions, especially w/ benzodiazepines.
Question: how do we know these are interactions as opposed to just co-occurrence?
And this was my answer, slightly edited:
 Excellent question! I think the answer is that obviously we don’t know. In fact I argue in several of my posts that the proliferation of substances on death records casts doubt on the idea that they are truly establishing the causes of death, versus just jotting down everything they find in a toxicology screening. Was cannabis use really a contributing cause of death? Probably not. If a record shows “cocaine” and “benzodiazepines”, I’m thinking that the medical examiner is just listing what s/he sees, because I don’t think there’s a known interaction between these substances. The things on the death certificate are supposed to be “contributing causes of death”, but I think we both know those records are fallible.
 On the other hand, I believe the interaction between opioids and benzodiazepines and alcohol (any combination thereof) is pretty well understood. Taken in combination, these substances suppress respiration more than if taken alone. Also, I think it’s pretty hard to “overdose” on any one of these substances. I’m sure some opioid users occasionally take way too much and accidentally kill themselves, but it’s probably more likely that they take a somewhat normal dose (given their tolerance) with some other substance and it has an unpredictable effect on their respiration. From the 2016 data, 90% of benzodiazepine poisonings involve some kind of opioid. Of course I have no way of knowing if benzodiazepines were just incidental or actually contributed to what proportion of these, but since the pharmacology of this interaction is fairly well understood I’d say “probably most of them.”
 For the deaths involving heroin and other synthetic opioids, I’m more sympathetic to the idea that the other substances listed on the death record are incidental. These strong opioids can be easy to overdose on, for sure. Still, it looks suspicious that such a large proportion of them involve multiple substances. 
I asked my wife, who is a pediatrician, and she said the medical examiner would probably just list everything found in a toxicology screening. But she also said there’s no standard (something I think you and I have both figured out), so you would get different records from different examiners looking at the same information.
I thought this clarification might be of interest to some of my readers. This correspondent is working on a paper on the opioid epidemic. He shares my skepticism about the official narrative. I'll definitely write a post when his paper comes out. When I got his question I was worried I was missing something, but he was basically pleased with my answer. (Apologies for the vagueness; I'm trying to avoid name-dropping for the sake of name-dropping here.)

Thursday, January 4, 2018

Divert More Power to the Shields!

In an episode of Star Trek: the Next Generation titled “Hero Worship,” a young boy is the sole survivor of his ship. The android Data rescues him, and the boy becomes enamored with Data and starts emulating him. Near the end of the episode, the same phenomenon that destroyed the boy’s ship starts hitting the Enterprise. A series of shockwaves hits. Captain Picard repeatedly demands more power diverted to shields to protect against the increasingly powerful shockwaves. The boy tells Data that that’s exactly what the crew of his former ship kept doing. Data insists that they lower the shields immediately. Over Riker’s protest (“That’s suicide!”) and everyone else’s skepticism, they do so and the final wave passes over the Enterprise harmlessly. Diverting power to the shields was causing the shockwaves to resonate more powerfully, and another round or two of doubling down would have destroyed the Enterprise.

I think about this whenever someone suggests doubling down on a bad government policy. The only reason drug prohibition isn’t working, the thinking goes, is that we aren’t hammering the problem hard enough. Perhaps medicine is so expensive and inaccessible because we haven’t regulated the market enough. We haven't put medical billing sufficiently into the hands of third-party payers, and we haven't placed enough restrictions on the pricing, claims-handling, and underwriting functions of those third-party payers. Education quality is low because government isn’t spending enough; ditto for why higher education costs are rising. Watching pundits “explain” these problems feels a lot like watching Pickard divert more and more power to the shields. And whenever someone recommends dropping the policies that aren’t working, I get a distinct hint of “That’s suicide, Data!” Maybe I’m wrong about some of the causes of these problems, but it’s disappointing to see so many commenters be so completely sure of themselves and to utterly lack any capacity to be self-critical. The notion that “We’ve tried my solution, and it just doesn’t work” is impossible for some folks to process. Given that, “double down” is the only viable play. 

Drunk Driver Flashers

How well would this work? Drunk drivers have to put on their hazard flashers, but then they are allowed to drive. They are still liable for any damage they cause, they are still compelled to obey traffic laws, and so on. Possibly, they must comply with even stricter traffic laws than the ones that normally apply, like a lower speed limit. But 1) everyone knows they are a drunk driver and 2) knowing 1) those drivers anticipate extra scrutiny and force themselves to drive more carefully.

Some obvious problems come to mind. A drunk driver can still be dangerous even if everybody knows they’re a drunk driver. A drunk driver can still fall asleep at the wheel, for instance.  Some drunk drivers may forget to put their flashers on, or some might fail to because they underestimate their own inebriation. Cops might target drunk drivers who are trying to honestly do the right thing; the flashers just make them an easy mark for cops looking to fill a monthly quota. This might discourage some people from using their hazard flashers, knowing that the extra scrutiny isn’t always fair. Some people might drink and drive more often knowing that "drive with flashers on" is an option. Of course some of these objections are in tension with one another. If drunks have no intention of using their flashers on the drive home, the moral hazard problem of being more likely to drive drunk goes away.

Problems aside, compare it to what we currently do. We take a random subset of drunk drivers and impose fairly serious punishments on them. Usually not jail time, but the public tarnishing of their reputation, loss of driving privileges, and a criminal record (that most drunk drivers unfairly evade). To make legal penalties against drunk driving more effective, you have to increase the probability of detection, not just the severity of punishment. I don’t know a good way to do that. But just as harm reduction with respect to drugs requires bringing them out in the open, in a transparent, legal market, maybe reducing the harms of drunk driving require making those drivers more visible. I think we see the same kind of problem with drunk driving sanctions that we see with penalties against drug use. High-severity, low-probability punishments are effective against normal, risk-averse people with a lot to lose, but aren’t quite as effective against people with poor judgment and impulse control problems. We want laws that produce effective deterrents for everyone, not just nice, normal people. We certainly don't want laws whose incentives miss the people who are causing most of the problem!

There is a wicked tension here between “Insisting that a problem behavior never, ever happen!” and “Admitting the reality that it will happen and doing something about it.” Just to be clear, I’m not sure which one is more appropriate in this instance. 

Tuesday, January 2, 2018

The Federal Government Doesn’t Care How Much Pain You’re In

The DEA tried to ban Kratom last year, backing off only after a loud public outcry. 

You can’t buy Vioxx. Merck “voluntarily” withdrew it from the market after it was linked to heart disease. But just try to sell some and tell me who stopped you from doing so. The removal of this class of anti-inflammatory medicines is not exactly “voluntary.” Even granting for the sake of argument that the risk of heart disease is as bad as everyone thinks it is, Vioxx might be the right solution to some people’s pain.

Prescription opioids are tightly controlled, and the DEA has been targeting even legitimate pain doctors for “overprescribing.” This encourages pain patients to shop for a doctor who will actually treat them, which in turn looks suspicious and marks that patient with a red flag, which then makes doctors even less likely to treat them.

Medical marijuana is finally taking off after a very slow start, and attitudes are changing. But the federal government has been a huge obstacle for far too long. We shouldn’t forget that they are still making it hard for growers and distributors. A lot more chronic pain patients would have access if the incredibly conservative drug policy bureaucracy in Washington D.C. would stop fighting it.

I hate to impute nasty motives to people, such as, “They just want you to live in pain.” But I get the serious feeling that these people just don’t give a shit. As I mentioned in a recent post, Trump’s presidential commission on opioids recommended “removing pain as the fifth vital sign.” They are telling us pretty explicitly that they just don’t care if we get adequate pain management or not. If lifestyle changes, ibuprofen and acetaminophen don’t work, too bad? 

There is a downright puritanical paternalism at work here. You can’t be trusted with opioids, cannabis, or kratom because some people might enjoy them too much. Plainly that must be stopped. And you can’t be trusted with pharmaceuticals because you’re too stupid to know what’s best for you and you’ll probably poison yourself. Or maybe the sustained assault on drugs isn’t due to any underlying motive or ideology. It could be sheer inertia. There are government agencies that are invested in keeping drug illegal, because otherwise those agencies would disappear. So they find things to do: analyze some data, investigate some individuals and businesses, ruin some lives, throw some people in jail, and so on. I get the nasty feeling that what I’m observing is just amoral, self-perpetuating bureaucracy at work.