Limited Liability for Vaccine Makers
Armchairs: What are the pros and cons of limiting liability for the maker of a new vaccine? It seems to me that a disadvantage of limited liability is the moral hazard that the maker will do a less responsible job of trying to prevent bad side effects. One advantage that has been put forth is that limiting liability gets us a vaccine sooner as firms are reluctant to make a new drug in the face of possible law suits for bad side effects. Is there alternate set of rules not involving limited liability that could be adopted to obtain a safe drug in a timely fashion? All the best, Asa Janney -- Somebody has to do something, and it's just incredibly pathetic that it has to be us. -- Jerry Garcia
The Popularity of Nonprice Rationing
All: For those of you who don't live in the VA/MD/DC area, we've been having a drought for some time. The governments of MD and VA have recently imposed water-use restrictions. This morning I heard on the news that the governor of VA has declared that I can no longer water my lawn or wash my car with purchased water; using saved rain or waste water for those purposes is allowed. I've been around long enough that I've seen governments resort to rationing and restrictions on use in several shortage instances, including those involving electric power and petroleum product supplies. My father, who owned a grocery store during World War II, told stories about commodity rationing during that period. It appears to me that price rationing is not allowed, unless the situation becomes permanent. Why is this? As it happens consistently, it must be the will of the people. The interesting question is Why? Among this group, I don't have to review the advantages of price rationing that all of you could list right off the cuff. However, nonprice rationing must be popular among noneconomists. Is it so because everyone feels better perceiving that her neighbor has to bear some pain of the shortage, too? Does the political popularity arise from the feeling of shared burden? With price rationing, those with lower incomes who perceive that they have to cut down on their consumption more, grumble that the rich still get to water their lawns. No matter that the rich are paying the higher price, too that is not perceived as so much of a sacrifice as doing without. What do you think? Asa Janney -- He took his vorpal sword in hand: Long time the manxome foe he sought -- So rested he by the Tumtum tree. And stood awhile in thought. -- Lewis Carroll, Jabberwocky
Re: children and cooperation
Bryan: Couldn't you test your first possibility -- 1. Adults have a much higher absolute IQ than kids (i.e., kids' IQs are age-adjusted, adults' IQs are not), so they are smart enough to recognize the indirect effects of their behavior. -- by checking whether adults with lower IQs exhibit less cooperative behavior? Is there any evidence of this? Yours, Asa -- These are the times that try men's souls. -- Thomas Paine, The Crisis
Re: double vs. single entry
Bryan: What exactly is the advantage of double-entry accounting over single-entry accounting? Two advantages come to mind: One is the automatic error prevention of having a built-in redundancy. The other is that every economic exchange by definition involves two quantities. A merchant trades silk for ducats. By making a credit to cash on hand and a debit to silk in inventory, he can keep a running account of the balances in each. All the best, Asa -- It is dangerous to be right when the government is wrong. -- Voltaire
Christopher Auld's paper
Christopher: I read your interesting paper Smoking, Drinking, and Income. At the end of the paper you write: smoking causes significantly larger losses in income than either drinking abstention or heavy drinking, but is is difficult to hypothesize plausible causal mechanisms which could generate effects of this magnitude. Have you seen Cigarette Smokers as Job Risk Takers by Kip Viscusi and Joni Hersh in *The Review of Econ. Stat.*, May 2001? Viscusi and Hersh find that smokers are more hazard prone than nonsmokers; they are much more likely to get injured on the job and at home. This raises the cost of employing a smoker and employers adjust their wages accordingly. They also find that smokers take more higher-risk jobs than nonsmokers, but get paid less for doing them. I don't have the article at hand, so I can't quote the percent difference in wages that they say this accounts for, but I recall that it was substantial. Yours, Asa Janney Applied Statistical Associates, Inc. Oakton, Va. -- The socialist society would have to forbid capitalist acts between consenting adults. -- Robert Nozick, Anarchy, State, and Utopia, 1974
Re: long-lasting cars
Gustavo: I think the technology is available to make cars last longer and that manufacturers do not make them last longer because they would make lower profits. Who would want a car that would last 20 years? Long before it wore out, various components in it would be obsolete or out of date with regulations. (It would also go out of fashion, too.) This is the problem with communications and other satellites that have long lives. The owners often choose to replace them long before they wear out because such better models have become avialable in the interim. Yours, Asa Janney Gustavo Lacerda (from work) wrote: Claim: auto manufacturers won't make cars that last long (say, 20 years of reliable operation) because they would make less money that way. Your opinion? Is the technology for reliable vehicles feasible for mass production? Would there be enough demand for such vehicles (i.e. the profit margin per vehicle is big enough to offset the loss due to fewer sales)? Gustavo -- If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away. -- Henry David Thoreau, Walden
