Welcome to week 272! The articles below caught my attention this week. Please note that what are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********). The links to articles preceded by [SR] require a subscription to be read in their entirety, although complete articles may frequently be found by an Internet title search.
(22 June 2016): “The secret of taste: why we like what we like” (https://www.theguardian.com/science/2016/jun/22/secret-of-taste-why-we-like-what-we-like)
********This is a review of You May Also Like: Taste in an Age of Endless Choice (https://www.amazon.com/You-May-Also-Like-Endless/dp/0307958248/), by Tom Vanderbilt. It is a “long read” of The Guardian. In conventional economics, tastes and preferences are fundamental in explaining human behavior, as are constraints on choice. The formation of tastes and preferences, however, is largely unexamined and ruled to be “outside the scope” of the discipline. Such formation tends to fall in the domains of psychology and sociology, and Vanderbilt’s book provides some guidance. In particular, chapter 8, “Why (And How) Tastes Change,” seems of particular interest.
(28 June 2016): “The Merging Worlds of Technology and Cars” (http://www.bloomberg.com/graphics/2016-merging-tech-and-cars/)
********This is a very brief article about the confluence of smartphones and cars. Its feature point, though, is the graphic which shows relationships between ride-hailing firms like Uber and Lyft, traditional auto industry firms like Ford, GM, and Toyota, and well-known tech giants like Apple and Google. Obviously much is in play regarding the future of transportation. Much of this is discussed clearly and interestingly in “Who Will Build the Next Great Car Company?” (http://fortune.com/self-driving-cars-silicon-valley-detroit/).
********Discussions of self-driving cars refer to different levels of autonomy, ranging from Level 0, where “The driver completely controls the vehicle at all times” to Level 4, where “The vehicle performs all safety-critical functions for the entire trip, with the driver not expected to control the vehicle at any time.” The five levels of autonomy—0,1,2,3, and 4—are discussed and additional content is provided at: https://en.wikipedia.org/wiki/Autonomous_car. As noted in the Fortune article, “Many experts don’t expect that the world will adopt Level 4 autonomy . . . for 25 years, or a full generational change. But partial autonomy arrived much sooner than anyone expected.”
********Another article of interest in the most recent Fortune might by title “The Merging Worlds of Technology and Banking,” although its actual title is “Here’s How Citigroup Is Embracing the ‘Fintech’ Revolution” (http://fortune.com/citigroup-fintech/). My son is now employed with online payments firm Stripe (https://stripe.com/about) after having been employed by Uber, so now I have a new firm to “notice” as I read. The article includes a graphic of the fintech universe and the markets they serve. The times they are a changing. At the end of the article, the author relates his personal experience with fintech, suggesting that there are wrinkles to be worked out.
(30 June 2016): “Hundreds of companies in the U.S. are selling unproven stem cell treatments, study says” (http://www.latimes.com/science/sciencenow/la-sci-sn-unapproved-stem-cell-treatments-20160630-snap-story.html)
——–“Have your weekly pickup basketball games left you with pain your knees that just won’t go away? Do you suffer from chest pain, lung disease r kidney failure? Has an accident left you with partial paralysis? Or, would you like to have a more rewarding sex life? If any of these conditions—or dozens of others—afflict you, there’s a clinic in the United States that would be happy to heal you with stem cells. From coast to coast, at least 351 businesses at 570 locations are marketing stem cell therapies that have not been fully vetted by medical researchers or blessed by the U.S. Food and Drug Administration, according to a study published Thursday in the journal Cell Stem Cell.”
********The article in question, a link for which is provided in the article, is “Selling Stem Cells in the USA: Assessing the Direct-to-Consumer Industry,” by Leigh Turner and Paul Knoepfler. You can read the article at: http://www.cell.com/cell-stem-cell/fulltext/S1934-5909(16)30157-6. The rise of stem cell clinics reminded me of the rise of pain clinics across the U.S. associated with the opioid epidemic, as described in Dreamland. I suppose that it is inevitable and unavoidable that new technologies will outrun regulatory oversight but that inaction is probably not the best approach if the health of potential consumers is of primary concern. This story was also covered by Bloomberg (http://www.bloomberg.com/news/articles/2016-06-30/stem-cell-clinics-selling-risky-treatments-explode-across-the-u-s), which has some useful additional information. In particular, it provides a link to a Paul Knoepfler’s blog The Niche (https://www.ipscell.com/). The post of June 30, 2016, which begins “Dang” is ironic in the extreme. There an image is shown of an ad for a stem cell clinic that showed up online in a media attention piece in Scientific American.
********Connected to the “Dang” post, there is a useful Op Ed in The Los Angeles Times, entitled “How we all became lab rats for American corporations and theoretical economists” (http://www.latimes.com/opinion/op-ed/la-oe-fisman-sullivan-economic-experimentation-online-20160703-snap-story.html). Anyone who has spent much time online has had the experience of being continually chased by something about which we have expressed an interest. Of special interest in the article is the demonstrable ineffectiveness of some types of internet advertising. Amazon, of course, has been a leader in using knowledge about consumer purchases to suggest other purchases. It now appears that they are experimenting with eliminating list prices for some of its products. You can learn more at: http://www.nytimes.com/2016/07/04/business/amazon-is-quietly-eliminating-list-prices.html.
(3 July 2016): “Hillary Clinton’s Ambitious Climate Change Plan Avoids Carbon Tax” (http://www.nytimes.com/2016/07/03/us/politics/hillary-clintons-ambitious-climate-change-plan-avoids-carbon-tax.html)
——–“Hillary Clinton, courting young voters and the broader Democratic base, has promised to one-up President Obama on climate change, vowing to produce a third of the nation’s electricity from renewable sources by 2027, three years faster than Mr. Obama, while spending billions of dollars to transform the energy economy.” She has promised to install a “half-billion solar panels” by 2020 and “would put the United States on track to reduce greenhouse gas emissions 80 percent from 2005 levels by 2050. . . . But Mrs. Clinton has avoided mention of the one policy that economists widely seen as the most effective way to tackle climate change—and one that would need Congress’s assent: putting a price or tax on carbon emissions.” According to Robert Stavins, who heads Harvard University’s environmental economics program, “The clearest and most obvious way to reach the climate targets is with a nationwide carbon pricing method, whether a carbon tax or a cap and trade . . . But it’s not surprising, given the politics, that Secretary Clinton would not want to explicitly talk about carbon pricing.”
*******No doubt political and economic factors mutually constrain one another is an overall system. This is a clear case in which political factors constrain the economic. As the article suggests, economists generally hold that a carbon tax, which internalizes the externalities associated with the production of carbon dioxide, are the least costly way to achieve any given level of carbon dioxide reduction. All this is quite interesting given that Exxon Mobil Corp. “is ramping up its lobbying of other energy companies to support a carbon tax.” The quote can be found in “Exxon Touts Carbon Tax to Oil Industry” (http://www.wsj.com/articles/exxon-touts-carbon-tax-to-oil-industry-1467279004).
********While we are on the subject of energy, I thought the article “Oklahoma Quakes Decline Amid Curbs on Energy Industry’s Disposal Wells” (http://www.wsj.com/articles/oklahoma-quakes-decline-amid-curbs-on-energy-industrys-disposal-wells-1467323816) was interesting. As the title indicates, “The number of earthquakes in Oklahoma has fallen 25% in 2016, compared with a year earlier, a decline attributed in part to actions by state regulators to police the oil and gas industry’s practice of pumping wastewater from its operations deep underground.” This brought to my mind the expression “states as laboratories” first noted in 1932 by Supreme Court Justice Louis Brandeis. Perhaps, when issues such as earthquake causation comes into view, the use of a randomized trials based upon different state laws might be used. Of course, different state laws are not true experiments, as is noted by James A. Gardner in Valparaiso University Law Review (http://scholar.valpo.edu/cgi/viewcontent.cgi?article=1888&context=vulr).
(5 July 2016): “New Payday Options for Making Ends Meet” (http://www.nytimes.com/2016/07/05/business/dealbook/new-payday-options-for-making-ends-meet.html)
——–“For decades, most American companies have paid their workers once every week or two, minimizing the administrative costs of frequent paydays and maximizing the interest the companies earn by keeping the money in the bank. . . . But now, thanks in part to the gig economy, a small but growing number of employers and start-ups are testing ways to give employees faster access to their wages. A variety of options—some involving payroll cards, and others using A.T.M.s and other methods—have recently hit the market permitting people to take home their pay as soon as they have earned it.”
********The article provides a nice summary of the different options now available. It certainly suggests that there is an economic problem to be solved in determining the “best” interval for paying employees for their work. Technological change seems to suggest that the pay interval is now shorter than previously. Lower interest rates would also suggest that there is less of a reason for employers to delay payment.
********Something that caught my attention was the story of Amanda Brannon, a legal secretary who also drives for Uber on occasion. In her “day job, . . . she is happy to stick with a traditional lump-sum check.” But as Uber pays her immediately for her work, “It makes it easier to pay for the big stuff . . . Uber is perfect for daily cash, but getting paid every two weeks is good, too.” All this reminds of electricity generation—big production facilities for base load and smaller production facilities for peak loads. I suspect what Ms. Brannon does is fairly common.
May you have a good week!