jamesz

Drug companies vs doctors

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Ezra Klein reports that

A review of seventy-four clinical trials of antidepressants found that thirty-seven of thirty-eight positive studies were published. Of the thirty-six negative studies, thirty-three were either not published or published in a form that implied a positive outcome. … To a doctor reading the published literature, 94% of the trials conducted were positive. In reality, 51% were positive.

He concludes that “[i]f the pharmaceutical companies will not fund research, then someone else must.” I’m not so sure. Read more

goonix

Bernanke on ‘too big to fail’ and incentives

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Yesterday Federal Reserve Chairman Ben Bernanke gave a speech to the Council of Foreign Relations. I heard a few soundbytes on Radio NZ National on my way home last night and was particularly interested in his comments on the concept of ‘too big to fail’.

Bernanke identifies that in a crisis, authorities have strong incentives to prevent the failure of large, interconnected firms, due to the negative externalities that arise from their failure. Such firms might be considered ‘too big to fail’.

However, Bernanke also identifies the undesirable effects that stem from the belief of market participants that a particular firm is considered too big to fail: Read more

jamesz

Carbon cost of cities

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There’s an interesting post at the NYT’s economics blog about the environmental cost of living in a city:

In almost every metropolitan area, we found the central city residents emitted less carbon than the suburban counterparts.
…
cars represent … one-third of the gap in carbon emissions between New Yorkers and their suburbanites. The gap in electricity usage [is] about two tons. The gap in emissions from home heating is almost three tons [of a seven ton total].

The decreased carbon cost of transport and Heating and Cooling in cities is predictable, but there are still questions remaining here.
Read more

Matt Nolan

A medium term divergence: RBNZ and Treasury

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The Rates Blog is reporting that new Treasury figures will indicate that New Zealand’s expected economic situation will be revised downward in the medium term.  However, the RBNZ’s latest MPS (effectively a forecast) states that we will get back to “potential” – with 4.8% growth in March 2011 and 3.8% growth in March 2012.

Treasury appears to think that NZ is facing permanent shocks to economic activity – while the RBNZ believes we are currently facing a transitory negative shock.  These debates are erupting around the world for all sorts of economies – but it is surprising to see the monetary body seemingly taking a different stance to the fiscal body.

Tell you what – when Treasury forecasts are actually released we will have a closer look, and we will try to figure out exactly what the difference is.  Is it just the rhetorical representation of the forecasts that differs, or do the two different organisations have different beliefs regarding the persistence of the negative shock hitting New Zealand for overseas?

Matt Nolan

March MPS: The Bank cuts …

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How much? I am currently away from my computer – this was a time delayed post 🙂

Still go to the RBNZ site and post down in the comments what happened 😉

How does it compare to our discussion yesterday?

Update: 50bp cut. Medium term growth is strong, and we get back to “potential” by 2012.  I think the earlier comment I had about medium term growth being a driver needs more qualification – I was assuming that the Bank believed any decline was temporary, and as a result the timing of the recovery is what I felt would be an important determinant of the cut today – and the ultimate terminal rate.

jamesz

The competitive urge

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Apparently humans are more competitive when there are fewer of us competing for the prize:

Students taking standardized tests in more crowded venues got lower scores. Students asked to complete a short general-knowledge test as fast as possible to win a prize if they were in the fastest 20 percent completed it faster if they were told that they were competing against 10 people rather than 100.

Intuitively, I guess that we feel more likely to win if we have to beat fewer people. With a smaller group to compete against, the probability of having a low ability group is greater than with a larger sample where ability is likely to be closer to the population distribution. I was going to class this as behavioural economics, but I suppose it just shows our intuitions to be more rational than I expected!

ht: Marginal Revolution