The 2019 Nobel Prize in Economics goes to…

…Abhijit Banerjee, Esther Duflo and Michael Kremer. The announcement on the 2019 Economics award on the Nobel website: This year’s Laureates have introduced a new approach to obtaining reliable answers about the best ways to fight global poverty. In brief, it involves dividing this issue into smaller, more manageable, questions – for example, the most effective interventions for…

Capitalism only works with trust

Capitalism is imperfect. Yet is it the best system developed to allocate scarce resources across society. However, capitalism only works if people are moral beings. For instance, if you sell a treatment and promised benefits are never realized or–even worse–the treatment is harmful, this is a problem. Typical capitalistic responses to this issue are that:…

For-profit chains are gobbling up local hospitals. What trend in the broader US economy explains this behavior?

One trend in recent years is how many hospitals are being purchased by large regional or national hospital chains. An April 2019 slide deck from the NIHCM Foundation shows this trend graphically. A paper by Hsieh and Rossi-Hansberg (2019) provide some aggregate data as well as a case study from the Boston area. Four decades…

Why don’t physicians follow evidence-based guidelines more often?

Many researchers complain that physicians often use treatments with little evidence to base these decisions. From off-label prescribing, to unstudied surgical procedures, physicians are often painted as cavalier practitioners who don’t read studies. For instance, Austin Frakt at Incidental Economist writes: The British Medical Journal sifted through the evidence for thousands of medical treatments to assess…

Net imagination exports

Many people talk of countries with net exports as having a good economy and those with net imports as having a less robust economy. However, an interesting book Why Information Grows by César Hidalgo talks about a more important feature being the imagination balance of goods and services exported. One example of a balance of…

Are economists dumb?

Maybe so according to Arnold Kling’s askblog, who argues that annuities are not very helpful for many people. Economists think that old people who do not annuitize their wealth are dumb. I decided a long time ago that it is the economists who are dumb. Old people face many risks other than the risk of…

Causality: Granger Causality

Earlier this year, I reviewed one definition of causality: the Bradford Hill criteria. Now I move from a medical definition causality to one developed by an economist (in fact, an economist from my alma matter). Granger causality basically identifies a variable as causal if: (i) it occurs the outcome of interest and (ii) including past…