Wednesday, June 12, 2013

Grab Bag

One of the mixed blessings of multidisciplinary research is you end up reading literature from several different disciplines. On one hand this constantly exposes you to different perspectives and reveals insights you'd otherwise never encounter. On the other, it's often difficult to keep current with developments from economics, cognitive science, psychology, and neurology.

This week rather than going in depth in a single topic I'm going to instead highlight three things I read in the past week that I found interesting. Two of the readings lean more towards the economics and policy side of the academic spectrum while the third is predominantly more focused on experimental design and psychology.

The first reading is by Michael Munger and can be found here.

Munger discusses recycling from an economic perspective and raised two interesting points.  Firstly, recycling doesn't always make sense. This is a statement that is probably obvious to most economists and nearing sacrilege for many non-economists.  Munger presents the example of common recyclable glass. Glass is essentially melted sand. When it is landfilled it essentially breaks back down to a substance similar to it's gritty origin.  Sand is neither scarce, valuable, or harmful.  If that is the case why do we go through all the trouble of recycling it?  The answer of course is that we've decided as a society that recycling is moral.  Morality is a wonderful justification, but it is usually not a valid economic argument.

Munger's second point is starkly contrasted with the first. If we recycle materials that aren't economically sensible, why don't we simply let the market determine what materials are valuable enough to recycle?  The problem with this approach according to Munger is the true costs and benefits of recycling are warped by waste disposal policies.

Imagine you needed to dispose of an aluminum can. You have essentially three options. You can pay someone to take the can from you (trash disposal/landfilling). The cost of this option is pretty clear. However, much you pay the firm that takes your can away is your cost (and hopefully their fee internalizes the societal cost of disposal). You could also simply throw the can on another person's property.  Most of the time this will cost you nothing except transport costs and hopefully a bit of guilt.  Sometimes it will cost you a great deal as you are arrested for illegal dumping.  Your final option is to find someone who is willing to take your can from you and use it as a resource (recycling).  So how do we determine which of these options is best economically speaking?

Rather than launching into an involved mathematical proof (my original intent) I'll attempt some simple logic. If waste disposal is very expensive more people will illegal dump their trash.  Thus, it behooves us to keep waste disposal artificially low rather than attempt to police and clean up after those who would impart their trash burden on others. However, keeping waste disposal costs artificially low crowds out recycling as a viable option for many materials. Thus if we allowed the free market to determine what should be disposed of we would likely choose not to recycle many materials that merit recycling when waste disposal costs are unsubsidized.

Munger thus demonstrates reasonably convincingly that a free market solution likely does not work and that current recycling policies are likely non optimal.  It's an interesting read, particularly for those when enjoy complex policy decisions/

The second reading is a blog post that looks at health insurance and a novel and accessible light. You can find the original posting here.

This article isn't terribly informative for an economist but I believe it's a wonderful explanation of the problems with health insurance for a layperson. Givens attempts to explain health insurance through an imagined mechanism known as "food insurance". Using food insurance as a new perspective he highlights many problems with health insurance and how ridiculous the entire system has become.

There's not a great deal to discuss about his posting, but if you'd like to know more about health insurance failures without a great deal of dry economic terminology I think it's worth a read.

The final reading is unfortunately behind a paywall so I am not permitted to share it (see last week's posting for my opinion on that). However, I want to take a moment to discuss the cleverness of the experimental design.

The study dealt with Anorexic patients and their brain's perception of their bodies location.  Individuals with Anorexia of course perceive their bodies to be larger than reality. These researchers wanted to know how deep this perception was ingrained in the brain. In order to explore this phenomenon they took Anorexic patients and non Anorexic control patients and had them pass through doors of varying width while performing a distraction task. They found that Anorexic patients turned their bodies in order to pass through doors that were 40% larger than their bodies while control patients didn't turn their bodies until doors were 25% larger than their body or less.

This data would seem to indicate that Anorexic patient's brains believe their bodies actually occupy more space than reality. Alternatively it may be that everyone turns their bodies when passing through doorways of a certain size and those doors are comparatively larger for Anorexic individuals. Personally I do not find the data to be terribly compelling. However, cleverly designed experiments are enjoyable regardless of how solid their findings.

That's all for this week. Until next week stay safe and rationale.

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