A cause and consequence of progress (again)

Today I would like to suggest you check my previous posts on Angus Deaton, the economics Nobel prize winner. And if you have more time, a close reading of his book is required: The Great Escape: Health, Wealth, and the Origins of Inequality.
Angus Deaton deserves the prize -NYT dixit-. John Cassidy writes an excellent op-ed (The New Yorker) with the title: Angus Deaton: A Skeptical Optimist Wins the Economics Nobel. Nothing to add.

A cause and consequence of progress

The Great Escape: Health, Wealth, and the Origins of Inequality

I have spent this long weekend reading the last book by Angus Deaton. It appeared in the list of FT business books of the year, although was not shortlisted. You may find a short reference at The Economist and an article by the author at Foreign Policy. As you know, I'm a follower of his works. You'll find references in previous posts 1, 2.
The book is worth reading. The topic and the author deserves spending time on it. And specially right now, with dubious prospects about economic growth and how it will affect to inequality.
Let me highlight some paragraphs from the book.
On inequality paradox:

Inequality is often a consequence of progress. Not everyone gets rich at the same time, and not everyone gets immediate access to the latest life-saving measures, whether access to clean water, to vaccines, or to new drugs for preventing heart disease. Inequalities in turn affect progress. This can be good; Indian children see what education can do and go to school too. It can be bad if the winners try to stop others from following them, pulling up the ladders behind them. The newly rich may use their wealth to influence politicians to restrict public education or health care that they themselves do not need.

On efficiency and the economists:

Economists—my own tribe—think that people are better off if they have more money—which is fine as far as it goes. So if a few people get a lot more money and most people get little or nothing, but do not lose out, economists will usually argue that the world is a better place. And indeed there is enormous appeal to the idea that, as
long as no one gets hurt, better off is better; it is called the Pareto criterion. Yet this idea is completely undermined if wellbeing is defined too narrowly; people have to be better off, or no worse off, in wellbeing, not just in material living standards. If those who get rich get favorable political treatment, or undermine the public health or public education systems, so that those who do less well lose out in politics, health, or education, then those who do less well may have gained money but they are not better off. One cannot assess society, or justice, using living standards alone. Yet economists routinely and
incorrectly apply the Pareto argument to income, ignoring other aspects of wellbeing.

On inequality and what to do about it:

Inequality can spur progress or it can inhibit progress. But does it matter in and of itself? There is no general agreement on this: the philosopher and economist Amartya Sen argues that even among the many who believe in some form of equality, there are very different views about what it is that ought to be made equal. Some economists and philosophers argue that inequalities of income are unjust, unless they are necessary for some greater end. For example, if a government were to guarantee the same income for all of its citizens, people might decide to work a lot less so that even the very poorest might be worse off than in a world in which some inequality is allowed. Others emphasize equality of opportunity rather than equality of outcomes, though there are many versions of what equality of opportunity means. Yet others see fairness in terms of proportionality: what each person receives should be proportional to what he or she contributes. On this view of fairness, it is easy to conclude that income equality is unfair if it involves redistributing income from rich to poor.

On Aid and Politics, (chapter 7).

The arguments about foreign aid and poverty reduction are quite different from the arguments about domestic aid to the poor. Those who oppose welfare benefits often argue that aid to the poor creates incentives for poor behavior that help to perpetuate poverty. These are not the arguments here. The concern with foreign aid is not about
what it does to poor people around the world—indeed it touches them too rarely—but about what it does to governments in poor countries. The argument that foreign aid can make poverty worse is an argument that foreign aid makes governments less responsive to the needs of the poor, and thus does them harm.

Aid is a controversial issue, and Deaton was criticised for it at NYT .  You may find here a recent example that supports anecdotically the argument of Angus Deaton. It's up to you, the final view on this difficult topic.

PS. On inequality in our days, at NEG.

A cause and consequence of progress (2)

The Great Escape: Health, Wealth, and the Origins of Inequality

Although Angus Deaton qualifies himself as cautiously optimistic in the book, some paragraphs may help to understand his caveats:

Our children and grandchildren cannot possibly expect a unique exemption from the forces that brought down previous civilizations. In Europe and North America we have grown to believe that things will always get better. The past 250 years have seen unprecedented progress, but 250 years is no great span of time compared with the long-lived civilizations of the past who doubtless thought that they were destined to last forever.

On growth:

Economic growth is the engine of the escape from poverty and material deprivation. Yet growth is faltering in the rich world. Growth in each recent decade has been lower than in the previous one. Almost everywhere, the faltering of growth has come with expansions of inequality. In the case of the United States, current extremes of income and wealth have not been seen for more than a hundred years. Great concentrations of wealth can undermine democracy and growth, stifling the creative destruction that makes growth possible. Such inequality encourages the previous escapees to block the escape routes behind them.
Mancur Olson predicted that rich countries would decline like this, undermined by the rent seeking of an ever-growing number of focused interest groups pursuing their own self-interest at the expense of an uncoordinated majority. Slower growth makes distributional conflict inevitable, because the only way forward for me is at your expense. It is easy to imagine a world with little growth but endless distributional conflict between rich and poor, between old and young, between Wall Street and Main Street, between medical providers and their patients, and between the political parties that represent them.

The inevitability of distributional conflict is the issue to take into account. This is in my opinion the greatest concern for the future, unless we are able to build firewalls to protect the foundations of social welfare.

 “The Kennedys” at Galería Loewe by Mark Shaw until Nov 15th

Les desigualtats justes

What does the empirical evidence tell us about the injustice of health inequalities?

En alguna ocasió he comentat que hi ha una indústria en l'anàlisi de les desigualtats en salut. Hi ha una producció continuada que no se sap ben bé on va ni quines implicacions pràctiques aporta, fins i tot és desconeix el consumidor de la recerca.
Hi ha una part necessària i fonamental de l'anàlisi que passa per la descripció, però el salt entre saber i què fer amb el que sabem és crucial. I aquí entren els mecanismes de causalitat, quines d'aquelles desigualtats són "injustes" i cal corregir. L'Angus Deaton ha fet un paper per posar ordre a les idees, cosa que s'agraeix, i diu:

Facts and correlations, without an understanding of causation, are neither sufficient to guide policy nor to make ethical judgments. Without getting causation right, there is no guarantee that interventions will not be harmful. It is also possible that an inequality that might seem to be prima facie unjust might actually be the consequence of a deeper mechanism that is in part benevolent, or that is unjust in a different way.

Després repassa diferents factors, origen, edat, sexe, raça, status socioeconòmic, etc. Destaco, especialment per a entusiastes:

The health inequalities literature frequently argues that differences in incomes cause health differences, a position that I have argued is largely mistaken. A related but different view is that differences in income are themselves a risk factor for the level of health (as well as for the levels of other good social outcomes), so that the rich as well as the poor are hurt by large income differences

I la seva conclusió:

Health inequalities are a matter of great moral concern. But whether we see them as an injustice, and whether and how we design policy to correct them, depends on how they come about. In this essay, I have argued that childhood inequalities are the key to understanding much of the evidence, and that public interventions would do well to focus on breaking or weakening the injustice of parental circumstances determining child outcomes. Among adults, the main priority should be the design of schemes that prevent the impoverishment that can come from ill-health, through loss of the ability to work, or through the costs of treatment.

Resta molt per fer i encara més per reconduir.

PS. Podeu consultar el Martmot Indicators aquí

Desiguals entre desiguals

 The persistence of health inequalities in modern welfare states: The explanationof a paradox

Dels treballs d'en Mackenbach ja n'he parlat anteriorment i m'ha interessat un article de fa poc. A Social Science and Medicine revisa el perquè de les desigualtats en salut. Sense ànim de ser concloent, en primer lloc mostra les teories que expliquen les desigualtats en salut:

The theories reviewed are: mathematical artifact, fundamental causes, life course perspective, social selection, personal characteristics, neo-materialism, psychosocial factors, diffusion of innovations, and cultural capital.

I alhora es pregunta quins són els motius potencials pels quals als països desenvolupats esdevé tant dificil reduir-les. Diu:

Based on these theories it is hypothesized that three circumstances may help to explain the persistence of health inequalities despite attenuation of inequalities in material conditions by the welfare state: (1) inequalities in access to material and immaterial resources have not been eliminated by the welfare state, and are still substantial; (2) due to greater intergenerational mobility, the composition of lower socioeconomic groups has become more homogeneous with regard to personal characteristics associated with ill-health; and (3) due to a change in epidemiological regime, in which consumption behavior became the most important determinant of ill-health, the marginal benefits of the immaterial resources to which a higher social position gives access have increased.

Al final ho acaba resumint en dues opcions, mala gestió (dels polítics) o mala sort (els canvis han portat a que les desigualtats es basin molt més en factors immaterials). Penso que parlar de mala sort s'allunya del que seria esperable com un motiu. Recordeu el post de l'Angus Deaton i els dels macacos i les desigualtats de salut, més material per pensar...

PS. I sobretot consulteu el darrer GCS, l'article d'en Guillem López-Casasnovas, va del mateix tema. Precís i pragmàtic.

PS. Si us interessa l'impacte redistributiu de la despesa sanitària pública, consulteu:  Evaluating the redistributive impact of public health expenditure using an insurance value approach. Conclusió:

Public health care expenditure in Spain acts progressively on income distribution. By adding the health benefit to disposable income of Spanish households, and ignoring possible behavioral responses, it turns out that poverty is reduced by almost 50 %. The average amount of in-kind subsidies received by households is considerable and its adequacy is good. Health care subsidy accounts for 59 % of household disposable income for the families in the first decile. Provision of public health care substantially reduces poverty incidence and poverty severity in Spain, granting a more equal distribution of living standards, as shown by a reduction in the Gini index by 5.4 percentage points.

Se m'escapen algunes coses, metodologia, dades?. No sé...

PS. Encara més motius per la desconnexió. Des del NYT, dedicat a tots aquells que encara no s'han decidit i aquells que ho volen comprendre.

PS. I encara més motius per fer-ho quan més aviat millor. Un video on es mostra com l'incompliment dels compromisos d'inversió i les lleis porta a un augment de la mortalitat relativa. Motius per denunciar l'Estat davant la fiscalia.

What is the alternative to Friedman’s capitalism?

 Milton Friedman 50 Years Later

Angus Deaton says:

“Milton Friedman was one of the foremost thinkers who challenged the post-war Keynesian consensus. He was immensely successful in arguing the pro-market case, and questioning the ability of government to improve on market outcomes. Today, we need to reopen these questions, using new economic thinking and new evidence; is the market bringing the unalloyed benefits that Friedman thought it would? This book is an important contribution to that reevaluation,”

And this is the capitalism that Martin Wolf expects:

“in which companies would not promote junk science on climate and the environment; it is one in which companies would not kill hundreds of thousands of people, by promoting addiction to opiates; it is one in which companies would not lobby for tax systems that let them park vast proportions of their profits in tax havens; it is one in which the financial sector would not lobby for the inadequate capitalisation that causes huge crises; it is one in which copyright would not be extended and extended and extended; it is one in which companies would not seek to neuter an effective competition policy; it is one in which companies would not lobby hard against efforts to limit the adverse social consequences of precarious work; and so on and so forth.”   

 

How much does healthcare cost during your life?

Estimating lifetime healthcare costs with morbidity data

We don't know when we can get an illness, how much it will cost to treat and how much time will last. Thats the rationale for being  insured. However, if you were born in 2007 your lifetime healthcare costs in Baix Empordà were 111.936 € for women and 81.566 € for men (on average and without any additional assumption about changes in unit costs). As far as this is the average, mandatory insurance allows for compensating those in ill health by those that are healthy. This is an unique efficient result, any departure from such option would require individual savings and potential debt when having an illness.
We have just published such estimation in BMC Health Services Research, those of you that follow this blog will remember this 2011 post. Lifetime health trajectories is a challenge for research, our contribution is just one of the first steps in such direction.

PS. Must read (as usual), Uwe Reinhardt blog on Angus Deaton.

PS. Economic and financial conditions are again "bubble-like.". WSJ dixit today. I agree.

PS. Toni Catany, exhibition at Galeria Trama.

Opioid crisis

Deaths of Despair and the Future of Capitalism

Beyond covid crisis there is still another one in US: the opioid crisis. The most relevant book on the topic is the Case-Deaton one.

We are telling the story in the way that we uncovered it, starting with midlife deaths of all kinds. We then focused on the immediate causes, which turned out to be deaths of despair among whites plus a slowdown and reversal in deaths from heart disease, which, until then, had been a main engine of mortality decline. Unfortunately, deaths of despair are not only afflicting middle-aged whites. While the elderly have been largely exempt, there have also been rapid increases in deaths of despair—particularly from overdoses and suicides—among younger whites. For whites between the ages of forty-five and fifty-four, deaths of despair tripled from 1990 to 2017. In 2017, this midlife age-group
had the highest rate of mortality from deaths of despair. But whites in younger age-groups were also doing badly and their deaths rose even more rapidly, accelerating in the last few years.

 Drug overdoses are the single largest category of deaths of despair. They are part of a broader epidemic that includes death from alcoholism and suicide, a reflection of the social failures that we have described in this book. Yet the behavior of the pharmaceutical companies caused more deaths than would otherwise have happened, showering gasoline on smoldering despair. Stopping the drug epidemic will not eliminate the root causes of deaths of despair, but it will save many lives and should be an immediate priority. Addiction is extremely hard to treat, even with the cooperation of the addict. There appears to be wide agreement that medication-assisted treatment can be effective, but it is not available to everyone, often because of cost.

Ps. Medicaments i risc de pneumònia

 Els analgèsics opiacis causen depressió respiratòria amb la hipoventilació pulmonar resultant;
alguns d’ells (codeïna, morfina, fentanil i metadona) també tenen efectes immunosupressors.
Incrementen el risc de pneumònia i la mortalitat respiratòria en un 40 a 75%.26,27,28
L’any 2018, uns 50 milions de persones als EUA (15% de la població adulta, 25% entre els més
grans de 65 anys) reberen una mitjana de 3,4 prescripcions d’analgèsics opiacis, i 10 milions de
persones reconeixien consum exagerat d’analgèsics de prescripció mèdica.29 A Europa en els
últims anys el consum d’opiacis suaus y forts ha augmentat, sobretot entre la gent gran.30,31
Fentanil i morfina son els opiacis forts més consumits, i més recentment oxicodona. El
tramadol, que és també inhibidor de la recaptació de serotonina, és l’opiaci suau més consumit.
En dos estudis observacionals de publicació recent, el consum de tramadol, comparat amb el
d’AINE, es va associar a una mortalitat 1,6 a 2,6 vegades més alta,32,33 sobretot en pacients
amb infecció i en pacients amb malaltia respiratòria.

The deeper connection between the opportunity gap and growing income inequality

Our Kids. The American Dream in Crisis

Today I'm bringing some selected statements to you from ch. 6 of a great book by Robert Putnam. His views, properly adapted, also apply to our country. It is not only a US issue.

As income inequality expands, kids from more privileged backgrounds start and probably finish further and further ahead of their less privileged peers, even if the rate of socioeconomic mobility is unchanged.

In 1975 economist Arthur Okun famously formulated what he called “the Big Tradeoff” between equity and efficiency. We could pursue policies that would enhance social equity—say, by redistributing income through the tax system—but only at the cost of economic productivity. It is sometimes forgotten that Okun himself argued that this ironclad tradeoff does not typically apply to the pursuit of equality of opportunity. In such cases, there is no such tradeoff, because investment in poor kids raises the rate of growth for everyone, at the same time leveling the playing field in favor of poor kids.

But why should the opportunity gap matter for those of us on its lucky side? The answer is that the destiny of poor kids in America has broad implications for our economy, our democracy, and our values.

The essence of democracy is equal influence on public decisions. A representative democracy requires at least widespread, if not universal, voting and grassroots civic engagement. The more that other means of political influence, such as money, are powerful and unevenly distributed across citizens, the more important electoral and grassroots involvement becomes for ensuring some approximation to democracy.

That more educated and affluent citizens participate more actively in public affairs, and have more political knowledge and civic skills than their impoverished, ill-educated fellow citizens and are more likely to take part in virtually all forms of political and civic engagement, is one of the most robust findings of students of political behavior. So what are the implications of the growing opportunity gap for American democracy? Rich kids are more confident that they can influence government, and they are largely right about that. Not surprisingly, poor kids are less likely to try.

What can we do—as members of our communities, and as a country—to help poor kids begin to catch up with rich kids? As this book has outlined, this problem is not simple, and it does not have a simple solution

Family structure, child development and parenting, schools and community, four approaches that R. Putnam suggests to address the issue.

In our polarized public debate an unexpected consensus has begun to crystalize across ideological lines that the collapse of the working-class family is a central contributor to the growing opportunity gap.

Interesting approach, and unfinished in my modest opinion. What happens when you have the most educated generation and your country is not able to provide jobs for them? That's why we do need an State, at least to define the right policies according to our preferences.

 

PS. Angus Deaton on inequality 

La part plana de la corba de longevitat

Esperanza de vida y causas de muerte: Un análisis de descomposición (1975-2009)

Aquest darrer treball d'en Goerlich és una referència a tenir en compte. Cada cinc anys està augmentant un any l'esperança de vida. Les millores en esperança de vida provenen de la disminució de mortalitat en edats avançades, però la contribució és superior per al grup d'edat de 15-64 anys.
El càncer frenava els creixements d'esperança de vida entre 1975 i 1992 i passa a mostrar contribució positiva entre 1992-2009. Qüestió que mereix més anàlisi, sens dubte.
Es manté la mortalitat segons geografia malgrat l'anivellament en condicions de vida, una altra qüestió per reflexionar.
Hi ha molts més detalls, cal llegir-los amb atenció. Per cert, algú sap on comença exactament la part plana de la corba de longevitat? Ens hi acostem? Ho podrem assumir?

 La corba de Preston, per Angus Deaton (2004)