persons with disabilities (PwDs) – a new database

December 5th, 2013

[I]n recognition of the International Day of Persons with Disability, we are launching a Disability Benefit database to give some much needed publicity to this oft-neglected social security instrument. The database complements a similar and very useful old age pension database that can be found at HelpAge International’s Pension Watch website. Our hope is that the database will give some support to the persons with disabilities of Kiribati and across the world as they struggle to have their rights recognised…..

Disability benefits should be a core component of any national social security system. There is strong international evidence that disability increases the risk of individuals and families falling into poverty. Many PwDs face additional costs if they are to access school or employment and disability benefits can provide them with essential support to increase their independence. Others face care costs – which can be significant – while family members often have to give up or reduce their employment to look after them. In the absence of a disability benefit not only do PwDs experience greater difficulties, so do their relatives, with significant impacts on the wellbeing of children. One consequence of the absence of a disability benefit – or an old age pension for the elderly with disabilities– is the greater social exclusion of PwDs ….

I’m writing this as the father of a daughter who has received a disability benefit from birth. It has made a significant difference to her life, enabling us to finance activities for her that – in the absence of the benefit – we would never have been able to. There are those who believe that my daughter should never have received this benefit, arguing that it should have been means-tested. They are wrong and they are prejudiced. Without it, her life would have been much less fulfilling. So, let’s not let the mean means-testers destroy the lives of people with disabilities across developing countries.

Stephen Kidd, “Disability Benefits: The Neglected Social Security Instrument“, Just KIDDing, Development Pathways, 2 December 2013.

Development Pathways’ new Disability Benefit database can be accessed here.

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John Kay on inequality

December 4th, 2013

There is nothing new here, but I found the entire column interesting, perhaps because I agree with it.

Some inequality is inevitable, and there seem to be three principal factors that make it more tolerable.

Inequality is easier to accept if everyone is becoming better off. Recent dissatisfaction in Britain and the US is significantly attributable to the fact that while some have grown much richer, median incomes have not increased. The criticism that the rapid economic growth of China and India has been accompanied by rising inequality is mainly made from outside these countries.

Inequality is easier to accept if the beneficiaries have benefited people other than themselves. Bill Gates’s extraordinary wealth causes little resentment because he is associated with technological innovations that have transformed business and personal life. Financiers rarely attract similar approval because – sometimes rightly, sometimes wrongly – they are suspected of appropriating wealth created by others rather than engaging in genuine wealth creation.

And inequality is more tolerable if its beneficiaries behave well. Mr Gates has chosen to devote his Microsoft fortune and his time to philanthropy rather than fly in entertainers and exotic foods for lavish parties. Investor Warren Buffett lives in the Omaha bungalow he purchased 50 years ago.

John Kay, “London’s mayor is half right on envy, greed and inequality“, Financial Times, 4 December 2013.

This will soon be posted at www.johnkay.com, in the archive of John Kay’s past FT columns.

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health insurance for the poor

December 3rd, 2013

Austin Frakt blogs today on Medicaid, government healthcare insurance for the poor in the United States. Medicaid is better insurance than you might think.

My point is that one can get a misleading impression of Medicaid access by relying only on studies that compare it to “any private” coverage and/or on studies that only survey physicians or their offices. Studies show that access can in fact be comparable to that of some private plans, particularly those [studies] that consider the direct experience of patients.

It’s worth also mentioning that the literature is more consistent in finding that the uninsured have even worse access than Medicaid or private plan enrollees. Medicaid is less than ideal, but not as bad as many might think; it’s also better than nothing.

Austin Frakt, “Medicaid and access: Not what you think“, The Incidental Economist, 3 December 2013.

That is his conclusion. Before you dismiss it, read the full blog. I am not qualified to judge, but Frakt’s argument seems compelling to me. Some time ago, I read that Medicaid patients who undergo surgery fare better on average than patients with private insurance. Why? Because hospitals receive very little compensation from Medicaid, so keep the patients in hospital for as short a time as possible. Medicaid patients recover faster and contract fewer hospital infections. I don’t have the source for this study, and my memory may be faulty. But I vividly recall reading this.

Private insurance plans differ. Some are very restrictive, while others (more expensive plans) allow considerable choice. When private plans are lumped together, this biases survey results against Medicaid. “If a doctor’s office does not accept new Medicaid patients but does accept a patient from any one of the many possible private plans, then that counts as accepting private patients.”

Austin Frakt is a health economist at Boston University’s School of Medicine and its School of Public Health. Here is his link to a 7-page review of the literature on this subject.

 

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changing role of teachers

December 2nd, 2013

TdJ welcomes Christopher back to the blogosphere. This is an amazing post. Take time to read all of it.

For many years the archetypal teacher has been the ‘sage on the stage’ ….. An experienced adult with appropriate qualifications hands down information from the lecturer’s podium to a student audience. Lectures proceed with the calculated regularity of a locomotive. Students must follow along at the prescribed pace or be left behind. There are extra readings, assigments, quizzes and exams to extend learning beyond the lecture hall, but these are almost always of a one-size-fits-all nature. ….

There is some value to this paradigm. When information was costly and difficult to obtain, it made sense for a specialist to collect it on behalf of the students, then feed it to them in a partially digested form. This is similar to how parent birds feed worms to their hatchlings, or how a bee collects pollen and returns it to the hive.

As information becomes abundant and easy to access, the importance of this role diminishes. Anyone with access to a web browser can retrieve information – too much of it, in fact. The expert’s role then shifts from the ‘sage on the stage’ to the ‘guide on the side’. The value added from a real live (or pre-recorded) instructor is in giving a guided tour of the neighbourhoods everyone is free to walk through, imbuing them with structure, sense and meaning.

The same technology driving this shift – web search, social networking, interactive applications and so on – also makes it possible for learning to be customized to a student’s characteristics and potential to a remarkable degree.

In what follows, I will take you on a tour of a small first step into this new ‘blended learning’.

Christopher Willmore, “An experiment in personalized learning“, Stray Silvers, 25 November 2013.


 

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Ha-Joon Chang at lunch with the FT

December 2nd, 2013

[For Ha-Joon Chang], economics is a tool for changing the world, not for explaining why the world is as we find it. He is a reader at Cambridge rather than a full professor, a relative sidelining he attributes to his heterodox approach. “I don’t do maths,” he says, blinking softly through his round, silver-rimmed spectacles. “A lot of economists think I’m not an economist.” ….

I ask whether he thinks economics is a moral pursuit. Chang’s starting point seems to be that economic policies can make the world better. “Moral dilemmas are unavoidable,” he says as I signal for the bill. “Don’t forget that, at least in this country, economics used to be a branch of moral philosophy. Adam Smith, Karl Marx, Joseph Schumpeter – they’re not just writing about economics, but about politics and culture and society and morality.” He drains his cup. “How has this wonderful subject we call economics become so narrow-minded? I find that really sad.”

David Pilling, “Lunch with the FT: Ha-Joon Chang“, Financial Times, 30 November 2013.

This is a tiny portion of a fascinating interview – one of the most interesting that I have seen in the “Lunch with the FT” series. Korean economist Ha-Joon Chang (born 1963) has authored numerous books, including Kicking Away the Ladder: Development Strategy in Historical Perspective (Anthem Press, 2002), which won the 2003 Gunnar Myrdal Prize. His work is controversial. He explains “most of my professional colleagues, who are much keener to accept market outcomes than I am, would dismiss me as a crank or – the worst of all abuses among economists – a ‘sociologist’”. Nonetheless he was awarded the 2005 Wassily Leontief Prize from the Global Development and Environment Institute. (Previous prize-winners include Amartya Sen, John Kenneth Galbraith, Alice Amsden and Robert Wade.) FT Asia editor David Pilling notes that “his books have been bought by more than 1.3m people – not bad for an economist who turned up in Cambridge 27 years ago barely able to speak English.”

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another reaction to Pope Francis

December 1st, 2013

James Pethokoukis, at the American Enterprise Institute, posted a response to the Pope’s message that I prefer to Mankiw’s reaction. Mr Pethokoukis doesn’t say much, but directs us to a statement of University of Illinois professor Deirdre McCloskey that is two years old.

Some on the left are interpreting the Pope’s statement as the pontiff taking sides against free marketeers. I will write more on that later, but I thought this from the great Christian libertarian economist Deirdre McCloskey provides a useful lens through which to view the Pope’s comments:

Friedrich Hayek, the modern master of what people in the USA call “libertarianism” and what others call “real liberals,” once wrote an essay entitled “Why I Am Not a Conservative.” He was not a conservative, nor am I or Robert Nozick or Tom Palmer or Donald Boudreaux or Ronald Hamowy or John Locke or Thomas Paine or (the Blessed) Adam Smith.

I am a Christian Liberal. That is, I believe on the one hand that in human affairs the best policy is to let people alone to exercise their creativity. Such creativity has made the modern world. We should take power away from the massive modern state, which so often follows the Other Golden Rule: Those who have the gold, rule. States are corrupted by the rich ….

But on the other hand as a Christian I also believe that as a spiritual affair we should love God and love God’s creatures, that is, our neighbors as ourselves. (It is Jewish and Muslim law, too: Rabbi Hillel was asked to summarize the law and the prophets while standing one leg. His reply was: to love God , the commandments 1-4, and our neighbors, 5-10.) In consequence, unlike fatherly and unChristian liberals, I believe in helping the poor.

At a meeting libertarians/liberals last year in the Bahamas I expressed to someone what I thought was an axiom, “But of course we all want to help the poor.” He instantly retorted, “No: only if they help me.” It took my breath away. I want to help the poor, period, not only as part of an exchange … And my liberal part adds to my Christian duty: Help the poor really, not by making them unemployable by raising the minimum wage, or uneducated by forcing them into public schools, or violent and victimized by outlawing recreational drugs.

Deirdre N. McCloskey, “Christian Libertarianism (or, outside the USA, Christian “Liberalism”): An exchange with The Clinic, a satirical journal in Chile”, Prudentia, 21 November 2011.

James Pethokoukis, “A Christian, free-market response to Pope Francis“, AEI Ideas, 26 November 2013.

From what McCloskey says, it follows that the best way to help the poor is to help everyone, with universal (taxpayer financed, public or private) schooling and healthcare, universal child allowances, and universal old age pensions. Poverty can be eliminated if flat benefits are generous enough, bureaucracy will be minimized and the State will be stripped of its power to determine who receives benefits. Access to universal benefits depend only on legal residence and (sometimes) age, not wealth or income. Cash allowances for children go to the child’s mother or legal guardian, not directly to the child.

What is often ignored is that Hayek, in his essay “Why I Am Not a Conservative”, explained also why he was not a libertarian. He was living in Chicago at the time, and unhappy with American conservatives and libertarians.

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Pope Francis on the excesses of capitalism

November 30th, 2013

[Pope Francis] has adopted a softer tone toward gay people, eschewed lavish features of the papal lifestyle, washed the feet of convicts and repeatedly called for greater efforts to lift up the world’s poor.

On Tuesday, he showed a willingness to use tough language in attacking what he views as the excesses of capitalism. ….

“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Francis wrote in the papal statement. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”

“Meanwhile,” he added, “the excluded are still waiting.”

Zachary A. Goldfarb and Michelle Boorstein, “Pope Francis denounces ‘trickle-down’ economic theories in critique of inequality“, The Washington Post, 26 November 2013.

I appreciate the pope’s concern with those left behind as the rich become richer, as well as his insistence that priests take seriously their vows of poverty, and minister to those less fortunate. None of these papal views are new. What is new is Pope Francis’ use of the term ‘trickle down’. This will ruffle more than a few feathers. Greg Mankiw, for example, reacted with these words:

[F]ree-market capitalism has been a great driver of economic growth, and … economic growth has been a great driver of a more moral society.

… “[T]rickle-down” is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose. It is equivalent to those on the right referring to the “soak-the-rich” theories of the left.It is sad to see the pope using a pejorative ….

[A]s far as I know, the pope did not address the tax-exempt status of the church. I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.

Greg Mankiw, “The Pope’s Rhetoric“, 30 November 2013.

These are strong words. Mankiw asserts that unfettered capitalism leads to “a more moral society” and questions whether the church contributes to this goal.

It is possible to argue that capitalism, despite its many faults, is better than the alternatives. Mankiw chooses not to follow this line of reasoning. It is sad to see a Harvard economics professor describe capitalism as flawless and virtuous.

Greg Mankiw was adviser to two Republican politicians: President George W. Bush and presidential candidate Mitt Romney.

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targeting the ultra-poor

November 27th, 2013

Years ago the Indian economist and Nobel laureate Amartya Sen (born 1933) concluded, in an essay on targeting the poor:

[T]he elementary case for targeting has to be qualified by taking adequate note of the various costs of targeting, including informational manipulation, incentive distortion, disutility and stigma, administrative and invasive losses, and problems of political sustainability. These diverse considerations, which can reinforce each other, limit the scope for no-nonsense targeting, tempting as it is. ….

I do not doubt that some expert in modern economics would find it helpful to say that targeting should be pushed exactly to the point at which the marginal benefit from it equals its marginal cost. Anyone who is enlightened by that wonderful formula fully deserves that enlightenment. [emphasis added]

Amartya Sen, “The political economy of targeting“, in Public spending and the poor: theory and evidence, edited by D. van de Walle & K. Nead (John Hopkins University Press, 1995), p. 22.

Two Yale University economists have taken up Professor Sen’s challenge, without citing him. Here is the first paragraph of their paper, published by the National Bureau of Economic Research (NBER):

Effectively identifying the appropriate recipients for aid programs is critical in order to maximize social impact with scarce resources. The erroneous inclusion of a household that is not part of the target population generally means resources wasted. Yet effective targeting is not costless. In theory, the economics are straightforward: screen such that the marginal cost of screening out the marginal ineligible participant is equal to the wasted resources transferred as a result of mistargeting. [emphasis added]

Dean Karlan and Bram Thuysbaert, “Targeting ultra-poor households in Honduras and Peru“, NBER Working Paper No. 19646, November 2013.

Ungated link here.

These views are diametrically opposed to those of Amartya Sen. I have two comments. Read the rest of this entry »

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toward universal pension coverage in Mexico – update

November 26th, 2013

Mexico’s “universal pension” (in reality a Universal Minimum Pension) has not passed the Senate, so has not yet become law. Opposition parties – led by the conservative PAN – last week (21 November) asked for additional time so that commissions can discuss how the noncontributory pension and unemployment benefit (coupled to it) will be financed. Finance was ignored by the lower house when it quickly passed the legislation, which requires changes in the Constitution, so must pass the Senate with a two-thirds majority vote. Read the rest of this entry »

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toward universal income in Switzerland

November 23rd, 2013

This is a news story that I had missed: the Swiss will soon vote on whether to provide a basic income grant to all adults.

A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs ($2,800) per month from the state ….

Under Swiss law, citizens can organize popular initiatives that allow the channeling of public anger into direct political action. The country usually holds several referenda a year. ….

The timing of the vote has yet to be announced ….

“Swiss to vote on 2,500 franc basic income for every adult“, Reuters, 4 October 2013.

I was alerted to this by a column of FT ‘undercover economist’ Tim Harford. If the initiative passes, Switzerland will become the first country in the world to provide all its citizens with a basic income.

[Universal income] is endorsed not only by experts on inequality such as Oxford’s Sir Tony Atkinson, but by the late Milton Friedman, an unlikely communist. The idea of a basic income is one that unites many left- and rightwingers while commanding very little support in the mainstream. ….

[Friedman] saw an alternative to the current welfare state. We pay money to certain people of working age, but often only on the condition that they’re not working. Then, in an attempt to overcome the obvious problem that we’re paying people not to work, we chivvy them to get a job. Our efforts are demeaning and bureaucratic without being particularly effective. A basic income goes to all, whether they work or not.

Tim Harford, “A universal income is not such a silly idea“, Financial Times, 23 November 2013.

A universal old age pension is a type of basic income grant, one given only to the elderly.

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