Belated thanks to Roger Browne who responded to my last blog post and pointed out that there already is a standard unit of risk-- the micromort, which measures a one-in-a-million probability of death.
In the time it takes me to write this blog post, I've got something like a quarter of a micromort risk of dying from all causes. The average person racks up about 40 micromorts per day.
That's a pretty good benchmark! My little brain can understand numbers like one-quarter or 40.
There a great list of relative risks for various things on the wikipedia page for micromort. I've always wondered just how dangerous skydiving really is, and it isn't as dangerous as I thought. My risk of dying if I ever decided to jump out of an airplane (7 micromorts) would be about the same risk as sitting on the couch and watching TV for 4 hours.
Since I wrote my last blog post, we've had a hard frost, so my risk of dying from an Eastern Equine Encephalitis-infected mosquito is now zero micromorts.
I'm not sure what to think of the fact that while we were being warned about mosquitos here in Massachusetts, dying from fungus-tainted steroid shots manufactured here and administered by our doctors turned out to be a much higher risk. How much higher? I dunno. But I would if health officials and reporters started telling us how many micromorts of risk we're getting when we go outside for an hour during mosquito season or get a tainted injection from our doctor...
Sunday, November 11, 2012
Thursday, September 13, 2012
Standard unit of risk
The Massachusetts Department of Public Health has determined that Amherst is at "High" risk of mosquito-borne illnesses, and recommends that we all stay inside at dusk.
Yeah... but I like going outside at dusk.
The incentives for the Health Department are to exaggerate the risks, because when somebody gets Eastern Equine Encephalitis and dies they can (correctly) point to their High Risk Warning and say "not our fault, we told you so."
But maybe the risk really is high, and we ought to slather ourselves with DEET before walking downtown for dessert.
I wish there was a standard, easy-to-understand unit of risk, so the Heath Department could say something like "We estimate spending an evening in downtown Amherst with no mosquito repellant is 4-10 RUs (risk units)."
Where 1 risk unit is something we can all understand-- maybe "the risk associated with driving 100 miles on the highway."
Or "1 risk unit is the overall risk of dying in an accident in any given year."
I don't know what the right baseline would be; it doesn't really matter what is chosen, what matters is making it easy to compare the risks of things relative to each other. The Health Department says we're at High risk... but High compared to what?
Saturday, September 01, 2012
Self-driving cars
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| Sunset in Wyoming |
Not because I'm bad at it; like the vast majority of Americans, my driving skills are far above average. I just find it tedious and boring.
This summer we went on a bike trip in Colorado, and then did a big, 2,500-mile car trip through Utah, Idaho, Washington and Wyoming.
Some of that driving was interesting, with stunning scenery zooming by. But most of it was tedious and boring. We did it partly because I think long, boring car trips are a rite of passage for kids; I certainly remember being eleven years old, stuck in the back seat of the cars for hours on end, driving into the night and then staying in a boring hotel room.
My grandkids might never have the experience of being bored in the backseat of a car and having to deal with a tired and grumpy parent that has driven ten hours since breakfast. It looks like self-driving cars will happen in the next ten or twenty years.
I want to rent a self-driving RV for my next big road trip. I'd start my trip after dinnertime, tell it where I want to eat breakfast, and then sleep through all the boring, tedious driving.
I think self-driving cars will have big, unintended consequences. Maybe multi-hour commutes will be no big deal, and suburbs even farther away from city centers will be common.
Maybe weekend homes 8 or 10 hours away will become a lot more popular; sleep on the way there Friday night, sleep on the way home Sunday night.
They should be really bad news for airlines and high-speed rail, especially if special, "robot driver only" very-high-speed highways are built. If they make people fly less, they should be good for the environment-- although I expect the fuel saved from less flying will be balanced out by people travelling more overall.
Maybe we'll see lots of retired people becoming nomads, spending their money on gasoline instead of hotel rooms, spending nights in their Robobagos on the road, driving at 42 miles an hour in huge groups to get better gas mileage...
PS: the driving-skills-above-average sentence is just there to catch people who post snarky comments before reading to the end of the post (yes, I know that sentence cannot be true).
Wednesday, July 11, 2012
Is Store of Value enough?
I'm still deep down the Bitcoin rabbit hole, and I've been thinking about its "store of value" and "means of exchange" properties.
I wonder: if Bitcoin is used as just a store of value and nothing more, could that be enough?
Imagine it is years in the future, when the generation of new bitcoins has slowed to a trickle.
As a pure store of value, bitcoins would function as I-owe-you tokens. People who wanted to store value would buy bitcoins from people who were done using them to store value and needed some cash to buy something.
The value of a bitcoin would be a function of how many people wanted to store versus spend. If everybody decided at once they wanted to spend their money instead of saving it they would find no buyers and the price would drop to zero.
If lots of people had lots of extra money that they wanted to store (and they decided bitcoins were a good place to store it) the price of bitcoin would go up.
I'm not an economist, but I would guess that the desire for a good place to store value is pretty steady. I base that on the recent behavior of US Treasuries; people want a safe place to park their money so much that they have actually driven the inflation-adjusted interest rate on many Treasuries negative ("investors" are paying the US government to hold their money for them).
Bitcoins are a pretty darn good store of value; they don't take up any space, you can back them up, you can protect them with a password, you can split them up and store them in a lot of different places, and when you want to spend them you can do it from the comfort of your barcalounger using your cell phone.
You can even store them in your brain if you want (my brain is too flaky, I try not to store valuable things in there).
I can imagine that once they grow up bitcoins could have a lot of value purely as a store of value, even if they never take off as a currency used for everyday purchases.
I'm sure the overall demand for "store of value" goes up and down, but it looks to me like it is counter-cyclical-- when the economy is bad, people take money out of things like the stock market and put it into things like T-Bills or gold.
If bitcoins are used only as a store of value in the future, then we should see their value going up during recessions and down during boom times.
If they're used only as a means of exchange then we should see the opposite.
I hope they'll be used for both so they'll have a mostly steady value regardless of what the economy is doing.
DISCLAIMER: I've been saying this for a couple of years now, but it is still mostly true: Bitcoin is an experiment-- only invest time or money in it that you can afford to lose!
I wonder: if Bitcoin is used as just a store of value and nothing more, could that be enough?
Imagine it is years in the future, when the generation of new bitcoins has slowed to a trickle.
As a pure store of value, bitcoins would function as I-owe-you tokens. People who wanted to store value would buy bitcoins from people who were done using them to store value and needed some cash to buy something.
The value of a bitcoin would be a function of how many people wanted to store versus spend. If everybody decided at once they wanted to spend their money instead of saving it they would find no buyers and the price would drop to zero.
If lots of people had lots of extra money that they wanted to store (and they decided bitcoins were a good place to store it) the price of bitcoin would go up.
I'm not an economist, but I would guess that the desire for a good place to store value is pretty steady. I base that on the recent behavior of US Treasuries; people want a safe place to park their money so much that they have actually driven the inflation-adjusted interest rate on many Treasuries negative ("investors" are paying the US government to hold their money for them).
Bitcoins are a pretty darn good store of value; they don't take up any space, you can back them up, you can protect them with a password, you can split them up and store them in a lot of different places, and when you want to spend them you can do it from the comfort of your barcalounger using your cell phone.
You can even store them in your brain if you want (my brain is too flaky, I try not to store valuable things in there).
I can imagine that once they grow up bitcoins could have a lot of value purely as a store of value, even if they never take off as a currency used for everyday purchases.
I'm sure the overall demand for "store of value" goes up and down, but it looks to me like it is counter-cyclical-- when the economy is bad, people take money out of things like the stock market and put it into things like T-Bills or gold.
If bitcoins are used only as a store of value in the future, then we should see their value going up during recessions and down during boom times.
If they're used only as a means of exchange then we should see the opposite.
I hope they'll be used for both so they'll have a mostly steady value regardless of what the economy is doing.
DISCLAIMER: I've been saying this for a couple of years now, but it is still mostly true: Bitcoin is an experiment-- only invest time or money in it that you can afford to lose!
Monday, July 09, 2012
Paper/Plastic/Cloth
There was a discussion on the Amherst Town Meeting mailing list a while ago about paper versus plastic versus cloth grocery bags, which poked my "skeptical" and "libertarian" buttons.
"Skeptical" because I think much of the debate over paper versus plastic is driven by the "natural must be better" fallacy. Plastic comes from nasty, icky oil, and so must be worse for the environment than paper, which comes from beautiful, majestic trees. Cutting down beautiful, majestic trees to make paper is evil, too, of course, so we should all re-use organic hemp shopping bags.
"Libertarian" because the idea of Town Meeting deciding what the best way of bringing my groceries home just rubs me the wrong way; we'll all have different opinions on how much we value saving the environment, convenience, hygiene, cost, and signaling our environmental bona-fides by schlepping around filthy, tattered, disease-ridden reusable bags. (I'm skeptical of the idea that reusable bags are dangerous due to germs, but I respect that some people are genuinely worried about that)
So I was please to run across this thorough, data-driven study of plastic versus paper versus cloth bags on the environment:
http://www.biodeg.org/files/uploaded/Carrier_Bags_Report_EA.pdf
As far as I can tell, it's not a fluff piece sponsored by the Plastic Bag Council of Wales-- the study was sponsored by the Environment Agency, "a British non-departmental public body of the Department for Environment, Food and Rural Affairs and an Assembly Government Sponsored Body of the Welsh Government that serves England and Wales."
Looks like if you use your cotton bags more than 130 times, and you just throw out your plastic shopping bags, then cloth is better than plastic. I use ours probably twice a week, and they seem to last 3 or 4 years (about 300 or 400 re-uses), so definitely in the better-for-the-environment category.
So policy-wise, a disposable-bag-tax to encourage use of re-usable bags would be the smart thing to do.
Unless that means more people drive a little farther to Stop and Shop in Hadley instead of Big Y in Amherst, of course. I'd bet gasoline usage getting to the store is hundreds of times more damaging to the environment than what kind of bag you use. Charging 25cents for parking at the grocery store would probably be even better public policy.
PS: I generally don't like collecting things, but make an exception for reusable bags-- we've been collecting them from trips overseas. The little cloth bag we got from our stay in Yungaburra is my favorite, although the big re-usable plastic bag from Paris is probably the most functional. Travelling by airplane is absolutely terrible for the environment, though...
"Skeptical" because I think much of the debate over paper versus plastic is driven by the "natural must be better" fallacy. Plastic comes from nasty, icky oil, and so must be worse for the environment than paper, which comes from beautiful, majestic trees. Cutting down beautiful, majestic trees to make paper is evil, too, of course, so we should all re-use organic hemp shopping bags.
"Libertarian" because the idea of Town Meeting deciding what the best way of bringing my groceries home just rubs me the wrong way; we'll all have different opinions on how much we value saving the environment, convenience, hygiene, cost, and signaling our environmental bona-fides by schlepping around filthy, tattered, disease-ridden reusable bags. (I'm skeptical of the idea that reusable bags are dangerous due to germs, but I respect that some people are genuinely worried about that)
So I was please to run across this thorough, data-driven study of plastic versus paper versus cloth bags on the environment:
http://www.biodeg.org/files/uploaded/Carrier_Bags_Report_EA.pdf
As far as I can tell, it's not a fluff piece sponsored by the Plastic Bag Council of Wales-- the study was sponsored by the Environment Agency, "a British non-departmental public body of the Department for Environment, Food and Rural Affairs and an Assembly Government Sponsored Body of the Welsh Government that serves England and Wales."
Looks like if you use your cotton bags more than 130 times, and you just throw out your plastic shopping bags, then cloth is better than plastic. I use ours probably twice a week, and they seem to last 3 or 4 years (about 300 or 400 re-uses), so definitely in the better-for-the-environment category.
So policy-wise, a disposable-bag-tax to encourage use of re-usable bags would be the smart thing to do.
Unless that means more people drive a little farther to Stop and Shop in Hadley instead of Big Y in Amherst, of course. I'd bet gasoline usage getting to the store is hundreds of times more damaging to the environment than what kind of bag you use. Charging 25cents for parking at the grocery store would probably be even better public policy.
PS: I generally don't like collecting things, but make an exception for reusable bags-- we've been collecting them from trips overseas. The little cloth bag we got from our stay in Yungaburra is my favorite, although the big re-usable plastic bag from Paris is probably the most functional. Travelling by airplane is absolutely terrible for the environment, though...
Thursday, July 05, 2012
Big Picture Demographics
What is really happening when we "save for retirement"?
Well, it means you don't spend money you've earned right now, and, instead, do something else with it. Either you invest it (give it to somebody else, hope they do something productive with it, and share the gains with you) or you convert it into some asset (cash, gold, rare paintings) that you hope will keep its value.
Investing is great for the world; old cranky people lending their money to young, not-yet-cranky people to encourage them invent new and wonderful stuff makes the world a better place. "We" should do more to encourage it.
Saving cash under your mattress or storing gold or paintings in a vault increases the price of those things in the short run and might encourage governments to print more money, gold miners to dig up more gold, or painters to produce more Collection-Worthy artworks. None of which makes the world a better place (well, not for me, anyway, I'm a cretin who doesn't appreciate Fine Art).
And, of course, if the trend reverses and lots of people are try to sell that stuff to pay their grocery bills the price will fall. "Saving money" this way is a Ponzi scheme; you've got to assume that there will be enough people in the future who will be willing to work for you if you give them pieces of paper (or metal or canvas and paint) that you were willing to work for years ago.
I wonder how much of the global financial crisis and economic doldrums is driven by simple demographics-- by older people in developed countries (or their pension fund managers) deciding that they will save money for retirement in "safe" investments like government bonds or gold rather than "risky" investments like the stock market. I'm pretty sure I remember reading that we get more risk-averse as we get older, and the financial crisis seems worse in places where the population is aging most (Japan, Europe, the U.S.).
Unfortunately, the worse the economy gets the more likely we are to collectively "take fewer risks" and do really stupid-for-long-term-growth things like pay interest to banks on the cash they park at the Federal Reserve.
If I believed our governments were capable of making smart investment decisions maybe I'd agree with the Keynesians and be cheerleading for another big Stimulus-- "You're collectively getting older and stingier, so We will just do what we know is best for you and take that money you're sitting on and invest it in make-the-world-a-better-place stuff. Trust us, we pinky-swear we won't waste it on unproductive projects that make our political constituents and donors happy."
Is anybody happy with how that worked out last time around?
So: if big-picture demographics is a big part of what is driving economies into the ground, what should be done?
Seems to me an easy answer would be to convert Social Security into a system that actually invests the tax receipts in some productive, economy-expanding activity (bonds, the stock market, venture capital, whatever) instead of the government writing IOU's to itself and sticking them in a drawer somewhere. I'm a "wisdom of crowds" type of guy, so I'd prefer that individuals make the investment decisions (or decide who gets to make the decisions for them).
But I'd settle for an appointed or elected Panel of Experts investing the money and getting paid oodles of money based on how well or poorly their recommendations did after a decade or two.
Well, it means you don't spend money you've earned right now, and, instead, do something else with it. Either you invest it (give it to somebody else, hope they do something productive with it, and share the gains with you) or you convert it into some asset (cash, gold, rare paintings) that you hope will keep its value.
Investing is great for the world; old cranky people lending their money to young, not-yet-cranky people to encourage them invent new and wonderful stuff makes the world a better place. "We" should do more to encourage it.
Saving cash under your mattress or storing gold or paintings in a vault increases the price of those things in the short run and might encourage governments to print more money, gold miners to dig up more gold, or painters to produce more Collection-Worthy artworks. None of which makes the world a better place (well, not for me, anyway, I'm a cretin who doesn't appreciate Fine Art).
And, of course, if the trend reverses and lots of people are try to sell that stuff to pay their grocery bills the price will fall. "Saving money" this way is a Ponzi scheme; you've got to assume that there will be enough people in the future who will be willing to work for you if you give them pieces of paper (or metal or canvas and paint) that you were willing to work for years ago.
I wonder how much of the global financial crisis and economic doldrums is driven by simple demographics-- by older people in developed countries (or their pension fund managers) deciding that they will save money for retirement in "safe" investments like government bonds or gold rather than "risky" investments like the stock market. I'm pretty sure I remember reading that we get more risk-averse as we get older, and the financial crisis seems worse in places where the population is aging most (Japan, Europe, the U.S.).
Unfortunately, the worse the economy gets the more likely we are to collectively "take fewer risks" and do really stupid-for-long-term-growth things like pay interest to banks on the cash they park at the Federal Reserve.
If I believed our governments were capable of making smart investment decisions maybe I'd agree with the Keynesians and be cheerleading for another big Stimulus-- "You're collectively getting older and stingier, so We will just do what we know is best for you and take that money you're sitting on and invest it in make-the-world-a-better-place stuff. Trust us, we pinky-swear we won't waste it on unproductive projects that make our political constituents and donors happy."
Is anybody happy with how that worked out last time around?
So: if big-picture demographics is a big part of what is driving economies into the ground, what should be done?
Seems to me an easy answer would be to convert Social Security into a system that actually invests the tax receipts in some productive, economy-expanding activity (bonds, the stock market, venture capital, whatever) instead of the government writing IOU's to itself and sticking them in a drawer somewhere. I'm a "wisdom of crowds" type of guy, so I'd prefer that individuals make the investment decisions (or decide who gets to make the decisions for them).
But I'd settle for an appointed or elected Panel of Experts investing the money and getting paid oodles of money based on how well or poorly their recommendations did after a decade or two.
Friday, June 29, 2012
Health Care Predictions
Yesterday the Supreme Court upheld the Affordable Care Act.
On a meta-level, the decision made me happy-- it shows that at least one of the Supreme Court justices thinks for himself and doesn't always fit into the "Conservative" pigeon-hole that the media likes to put people into.
And I think the decision makes sense on a common-sense level; if it looks like a tax, smells like a tax, and sounds like a tax... then it is a tax. Even if they decide to avoid the "t-word" and call it a "mandate."
But... I don't think the Affordable Care Act will succeed in making health care more affordable.
If you've read this blog for a while you know I like to calibrate my thinking by making testable predictions. I have a terrible memory, and by writing down what I think will happen then comparing it to what actually happens I teach myself that I'm not as smart as I think.
So besides not making health care more affordable, what do I think will happen in the next 10 years?
Well, I don't think the Republicans will actually repeal the Affordable Care Act, no matter what they say right now. If Romney becomes president (I'm not even going to try to predict that, I have no clue) they'll repeal some little part of it and declare victory. If he loses then there will be a huge, noisy debate in Congress that ultimately accomplishes nothing.
After 2014 I predict a whole lot of healthy people will figure out that dropping their insurance coverage and paying the no-insurance-penalty (tax!) is, financially, the best thing to do. After all, if you get seriously sick you can always buy insurance then (no denying coverage for pre-existing conditions, remember?).
If nothing changes, I'd expect a year or two after that lots of small employers decide that paying the penalty to their healthy employees and dropping their coverage is also the smart thing to do.
So in 2018 or so I'd expect there to be a health insurance industry crisis that, in typical Washington "We need Another Law to Fix This Law that We Passed Back Then" fashion, prompts Congress to first try to make it illegal for employers to drop health plans and increase employee's compensation.
When that doesn't work, they'll increase the no-health-insurance-tax so it is more expensive than the least expensive health plan you can buy.
But health insurance costs will continue to ratchet up every year, the IRS will spend ever-increasing money tracking down people who cheat on their no-insurance taxes (there will be laws passed requiring health insurers to report on who has purchased insurance, so the IRS doesn't have to rely on possibly forged documents from taxpayers), and the whole cobbled-together system will be obviously falling apart again in 10 years.
What happens then, I have no idea. If the Democrats are in power, maybe we'll get a "Medicare for All" single-payer system.
If the Republicans are in power.... I have no idea what they'll do, they don't seem to have a coherent vision for what to do.
If I were King, I'd implement something like this for a national health care plan (inspired by a Megan McArdle proposal that I can't find right now):
1. De-regulate medicine as much as possible. At the very least, make doctor's and nurse's licenses portable across state and national lines and allow nurses to do much more routine health care. If I really were King I'd replace government medical licensing with private licensing, and give people the freedom to legally visit really crappy unlicensed doctors if they were willing to take the risk.
2. Eliminate tax breaks for the World-War-II-wage-controls-inspired "your employee buys your health insurance for you" system that most people are using now to get coverage. Every economist in the world agrees it is a stupid way to pay for health care.
3. Phase out Medicaid and Medicare. Replace them with a single, national, means-tested catastrophic health insurance plan that is simply something like "The US government pays for any health care costs that exceed X% of your adjusted gross income.
We could argue about what X is-- I don't think it should be zero because then people have no incentive to shop around for health care or weigh the costs and benefits of visiting the chiropractor twice a week (that's my problem with single-payer solutions). Somewhere around 10% feels right to me; you pay out-of-pocket for day-to-day health care expenses, but if you are unlucky and get seriously sick and either lose your job or have huge medical bills then we'll all chip in and pay for it. (this is where my libertarian friends disown me as a rotten-stinking Statist)
A system like that should have the right incentives to actually make health care more affordable.
On a meta-level, the decision made me happy-- it shows that at least one of the Supreme Court justices thinks for himself and doesn't always fit into the "Conservative" pigeon-hole that the media likes to put people into.
And I think the decision makes sense on a common-sense level; if it looks like a tax, smells like a tax, and sounds like a tax... then it is a tax. Even if they decide to avoid the "t-word" and call it a "mandate."
But... I don't think the Affordable Care Act will succeed in making health care more affordable.
If you've read this blog for a while you know I like to calibrate my thinking by making testable predictions. I have a terrible memory, and by writing down what I think will happen then comparing it to what actually happens I teach myself that I'm not as smart as I think.
So besides not making health care more affordable, what do I think will happen in the next 10 years?
Well, I don't think the Republicans will actually repeal the Affordable Care Act, no matter what they say right now. If Romney becomes president (I'm not even going to try to predict that, I have no clue) they'll repeal some little part of it and declare victory. If he loses then there will be a huge, noisy debate in Congress that ultimately accomplishes nothing.
After 2014 I predict a whole lot of healthy people will figure out that dropping their insurance coverage and paying the no-insurance-penalty (tax!) is, financially, the best thing to do. After all, if you get seriously sick you can always buy insurance then (no denying coverage for pre-existing conditions, remember?).
If nothing changes, I'd expect a year or two after that lots of small employers decide that paying the penalty to their healthy employees and dropping their coverage is also the smart thing to do.
So in 2018 or so I'd expect there to be a health insurance industry crisis that, in typical Washington "We need Another Law to Fix This Law that We Passed Back Then" fashion, prompts Congress to first try to make it illegal for employers to drop health plans and increase employee's compensation.
When that doesn't work, they'll increase the no-health-insurance-tax so it is more expensive than the least expensive health plan you can buy.
But health insurance costs will continue to ratchet up every year, the IRS will spend ever-increasing money tracking down people who cheat on their no-insurance taxes (there will be laws passed requiring health insurers to report on who has purchased insurance, so the IRS doesn't have to rely on possibly forged documents from taxpayers), and the whole cobbled-together system will be obviously falling apart again in 10 years.
What happens then, I have no idea. If the Democrats are in power, maybe we'll get a "Medicare for All" single-payer system.
If the Republicans are in power.... I have no idea what they'll do, they don't seem to have a coherent vision for what to do.
If I were King, I'd implement something like this for a national health care plan (inspired by a Megan McArdle proposal that I can't find right now):
1. De-regulate medicine as much as possible. At the very least, make doctor's and nurse's licenses portable across state and national lines and allow nurses to do much more routine health care. If I really were King I'd replace government medical licensing with private licensing, and give people the freedom to legally visit really crappy unlicensed doctors if they were willing to take the risk.
2. Eliminate tax breaks for the World-War-II-wage-controls-inspired "your employee buys your health insurance for you" system that most people are using now to get coverage. Every economist in the world agrees it is a stupid way to pay for health care.
3. Phase out Medicaid and Medicare. Replace them with a single, national, means-tested catastrophic health insurance plan that is simply something like "The US government pays for any health care costs that exceed X% of your adjusted gross income.
We could argue about what X is-- I don't think it should be zero because then people have no incentive to shop around for health care or weigh the costs and benefits of visiting the chiropractor twice a week (that's my problem with single-payer solutions). Somewhere around 10% feels right to me; you pay out-of-pocket for day-to-day health care expenses, but if you are unlucky and get seriously sick and either lose your job or have huge medical bills then we'll all chip in and pay for it. (this is where my libertarian friends disown me as a rotten-stinking Statist)
A system like that should have the right incentives to actually make health care more affordable.
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