Lawrence Economics Blog

Prominent economic historian Joel Mokyr and two co-authors, Chris Vickers and Nicholas Ziebarth, provide a compelling discussion of the historical relationships among technology, economic growth, and (cultural and other forms of) anxiety.  They address three major forces:

1. Widespread substitution of capital for labor in the short run with beneficial long run trends for employment and living standards

2. Anxiety over the moral implications of technological change on people’s welfare

3. The notion (as posited by economists including Robert Gordon and Tyler Cowen) that economic growth influenced by technological change is behind us.

They argue that the current episode is similar to our experiences with industrial revolutions of the past 250 years.  This time is NOT different.  The complete paper is available from the Journal of Economic Perspectives. 

I encourage everyone to read it.

In 2003, Michael Lewis published Moneyball, the story of how a team with a relative small payroll (the Oakland Athletics) was able to be competitive by understanding how a general manager (Billy Beane) should spend money to generate the most wins.  Many major league baseball teams now apply some of the strategies that Beane adopted and Lewis articulated.

In today’s “Upshot”, Jeremy Smith applies the same logic to how resources might be spent on improving health.   For a number of years, health economists have argued that death rates and life expectancy provide too limited a way to understand how much value the medical sector generates from its vast expenditures (approaching $3 trillion per year in the United States.)   Smith argues that not all years of life are equivalent and that most efforts by medical practitioners are unrelated to life and death situations.  He proposes DALYs – disability adjusted life years, an indicator that sums lost quality of life and lost life expectancy due to such disabilities, as a better indicator than life expectancy.

Lancet, the British equivalent to the New England Journal of Medicine, recently published an article analyzing 291 diseases and injuries across 21 regions of the world to assess the global burden of disease. Comparisons between rankings based on deaths versus DALYs  for the US in 2010 is quite interesting.

Using deaths, the top five causes are as follows:

1. Heart disease  2. Stroke 3. Cancer of the trachea, bronchus or lung, 4. Alzheimer’s or other dementias and   5. Chronic obstructive pulmonary disease (COPD)

The rankings using most DALYs foregone introduces two major differences:

1. Heart disease 2. COPD 3. Low back pain 4. Cancers of the trachea, bronchus or long, and 5. Major depressive disorder

Low back pain and major depressive disorder are not causes of death, but they generate huge amounts of pain and suffering and billions of dollars of lost productivity in addition to whatever medical services might be employed.

If a “Moneyball” approach to health spending was directed towards the DALY list, the gains in health and productivity would be substantial.  Unlikely baseball, however, there are no league standings based on health outcomes; therefore, the US continues to spend a great deal on clinical care without significant gains in health and reductions in the effects of disability.

Despite recent improvements, Latin America remains the most unequal region in the world.  Historically, one of the most important determinants of income and opportunity is access to land.  In this seminar Dylan Fitz will discuss the justifications for land reform and the implementation challenges that reforms face. The discussion will draw on his evaluations of recent market-assisted programs in Brazil that build upon previous land reforms.

New look blog, new look department.

Front (l-r):  Hillary Caruthers, Marty Finkler.

Back: Adam Galambos, David Gerard, Jonathan Lhost.

This was taken before Professor Finkler’s Povolny Lecture, ““China Ranks Number One. Or Does It? Should We Care?”