Incentives – Page 12 – artdiamondblog.com

Mexican Universal Health Care: “There Are No Doctors, No Medicine, No Hospital Beds”

(p. 6) A decade ago, half of all Mexicans had no health insurance at all. Then the country’s Congress passed a bill to ensure health care for every Mexican without access to it. The goal was explicit: universal coverage.

By September, the government expects to have enrolled about 51 million people in the insurance plan it created six years ago — effectively reaching the target, at least on paper.
The big question, critics contend, is whether all those people actually get the health care the government has promised.
. . .
The money goes from the federal government to state governments, depending on how many people each state enrolls. From there, it is up to state governments to spend the money properly so that patients get the promised care.
That, critics say, is the plan’s biggest weakness. State governments have every incentive to register large numbers, but they do not face any accountability for how they spend the money.
“You have people signed up on paper, but there are no doctors, no medicine, no hospital beds,” said Miguel Pulido, the executive director of Fundar, a Mexican watchdog group that has studied the poor southern states of Guerrero and Chiapas.
Mr. Chertorivski acknowledges that getting some states to do their work properly is a problem. “You can’t do a hostile takeover,” he said.
The result is that how Mexicans are treated is very much a function of where they live. Lucila Rivera Díaz, 36, comes from one of the poorest regions in Guerrero. She said doctors there told her to take her mother, who they suspected had liver cancer, for tests in the neighboring state of Morelos.

For the full story, see:
ELISABETH MALKIN. “Mexico Struggles to Realize the Promise of Universal Health Care.” The New York Times, First Section (Sun., January 30, 2011): 6.
(Note: the online version of the story is dated January 29, 2011 and has the title “Mexico’s Universal Health Care Is Work in Progress.”)
(Note: ellipsis added.)

The Elite Feel More Important, and Receive More Funding, During Crises

(p. 103) Claims of disastrous decline will he praised in the elite parts of society. Since many crave recognition or rewards from elites, people oblige by producing claims of disastrous decline. More generally, when things really are bad we naturally turn to eminent or powerful people for their advice and succor; when things are fine, the elite classes are of diminished importance to society. Important people like to feel important, and thus are biased toward viewing events in bleak terms. Consider that, during the 1990s, when nearly everything in the United States was trending positive, left-wing leaders as exemplified by the Manhattan chardonnay circuit, and right-wing leaders as exemplified by the Heritage Foundation circuit, slugged it out as though the world was ending: the left claiming religious fanatics were taking over the country, the right claiming the left was destroying the family and opposed to reading of the classics, to name a few totally cooked-up charges of that period. As Orlando Patterson, a Harvard University sociologist, noted in 1998, “It’s astonish-(p. 104)ing how the Washington and New York elites, who benefit so much from the improvement of the United States, are so out of sync with it, endlessly talking about how things are getting worse when the country is clearly improving.”

To those who benefit from bad news, either by fund-raising or increased self-importance, problems are not just problems but crises–the health care crisis, the farm-bill crisis, the tax crisis, the welfare crisis, the litigation crisis, the postage-rate crisis.

Source:
Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.

One in Three Students Lie on Professor Evaluations Mainly “to Punish Professors They Don’t Like”

(p. 6B) CEDAR FALLS, Iowa (AP) — Students aren’t always truthful on teacher evaluations, according to a study done by researchers at the University of Northern Iowa and Oklahoma State University.

About one-third of students surveyed at both schools said they stretched the truth on anonymous teacher assessments distributed at the end of a semester, The Des Moines Register reported. Fifty-six percent said they know other students who have done the same.
In some cases, students stretch the truth to make their instructors look good. But more often than not they lie to punish professors they don’t like.
. . . the study . . . will be published next year in the education journal, Marketing Education Review.
. . .
Clayson spent several years evaluating teacher evaluations, which ask students to grade their instructor on a number of topics, such as how much they learned in class to how accessible the instructor was. The evaluations can play a role in pay raises, promotions and tenure decisions.
Some instructors dumb down their classes or inflate grades to increase the odds students will like them — a practice widely known among professors and studied by researchers, including at Duke University, where researchers found professors who gave higher grades received better evaluations.

For the full story, see:
AP. “Professor Evaluations Can Be Tool or Weapon.” Omaha World-Herald (Tues., December 14, 2010): 6B.
(Note: ellipses added.)

Kappos Says Private Company Would Have Run Patent Office Better

“David Kappos of the Patent Office, with an Edison bulb.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) “There is no company I know of that would have permitted its information technology to get into the state we’re in,” David J. Kappos, who 18 months ago became director of the Patent and Trademark Office and undersecretary of commerce for intellectual property, said in a recent interview. “If it had, the C.E.O. would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits.”

Once patent applications are in the system, they sit — for years. The patent office’s pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.
The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.

For the full story, see:

EDWARD WYATT. “U.S. Sets 21st-Century Goal: Building a Better Patent Office.” The New York Times (Mon., February 21, 2011): A1 & A3.
(Note: the online version of the article is dated February 20, 2011.)

Patent Importance Survives the Results of Moser’s Worlds Fairs Data Analysis

(p. 264) Petra Moser, now a professor at MIT’s Sloan School of Management, spent four years examining more than 15,000 different inventions exhibited at nineteenth-century worlds fairs, and their equivalents, and discovered a fact that seems at first glance to discredit the idea that patent protection was essential for innovation: Nations without patent laws were in many cases just as inventive as those with them. Or even more inventive; some of the nations best represented at those industrial fairs actively discouraged the patenting of inventions.

The reason seems to be that whether or not they enforced a patent law, smaller nations or domains, such as the Netherlands and Switzerland, were vulnerable to the theft of their innovations by competitors in larger nations. The bargain of patent protection runs two ways: The state, in return for making an idea public, offers legal recourse to its creator should someone within the state steal the idea. Since making one’s invention public in a nation with patent protection offered protection against theft only up to its own borders, only a large nation offered a large enough market to make the deal a good one, and (in Moser’s words) the small nations “would have been silly to patent [their] innovations.”
This logic inhibited investment in entire categories of innovation. Those nations that relied on secrecy rather than patent tended to specialize in the sort of inventions that cannot be easily reverse–engineered, such as chemicals or dyes.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: italics and bracketed word in original.)

Luther Burbank’s Income Suffered Because His Inventions Could Not Be Patented

“Luther Burbank pollinating poppies in Santa Rosa, Calif.” Source of book image: online version of the NYT review quoted and cited below.

(p. C4) There is a particular type of potato at the heart of Jane S. Smith’s book about Luther Burbank, a man who described himself as an “evoluter of new plants.” Ms. Smith nicknames that potato “the lucky spud.” That turn of phrase is one of many reasons to appreciate “The Garden of Invention,” her colorful, far-reaching book about the genetic, agricultural, economic and legal issues raised by Burbank’s life and legend.
. . .
This book takes more than a passing interest in Burbank’s income, insofar as it reflected his legal ability to protect his scientific advances. In his early professional years he grappled with the doctrine that held that while a gold mine was real property and a machine to extract gold was intellectual property, the actual mineral belonged to anyone who could find it; ditto with potatoes. Throughout his career, even as he developed friendships with tycoons like Ford and Thomas Edison, Burbank lived under constant financial pressure to keep creating new plant products. “His income was entirely dependent on his latest marvel,” Ms. Smith writes

For the full review, see:
JANET MASLIN. “Books of The Times; The Curious Man Lucky Enough to Create ‘the Lucky Spud’.” The New York Times (Mon., May 4, 2009): C4.
(Note: ellipsis added.)
(Note: the online version of the article is dated May 3, 2009.)

The book being reviewed, is:
Smith, Jane S. The Garden of Invention: Luther Burbank and the Business of Breeding Plants. New York: The Penguin Press, 2009.

Those Who Paid Attention to Risk, Did Better in Crisis

Source of graph: screen capture from p. 43 of NBER paper referenced below.

At the American Economic Association meetings in Denver from January 6-9, I attended several sessions dealing the causes and cures of the economic crisis of the last few years.
One issue that came up more than once was whether, and to what extent, various decision makers were blameworthy in what happened. Was this a crisis that well-trained, hard-working and prudent managers, regulators and legislators should have seen coming? Or was it a once in 100 year storm that nobody should be expected to have foreseen?
One compelling bit of evidence was presented in a talk on January 8th by Charles Calomiris in which he presented a graph from a 2010 NBER paper by Ellul and Yerramilli. The graph, shown above, indicates that firms that took risk seriously, as proxied by their giving an important pre-crisis role to a Chief Risk Officer (CRO), tended to suffer less downside volatility during the crisis.

Source:

Ellul, Andrew, and Vijay Yerramilli. “Stronger Risk Controls, Lower Risk: Evidence from U.S. Bank Holding Companies.” NBER Working Paper # 16178, July 2010.

What Motivated Paterno to Win 400 Games—“Gettin’ Paid”

Source of image: screen capture from YouTube clip referenced below.

What motivates employees? Economists have emphasized pay as the primary incentive, while recognizing that there may be “compensating differentials” for aspects of the work that are pleasant or unpleasant.
In recent years many non-economists, such as Daniel Pink in Drive, have emphasized non-pecuniary incentives.
Joe Paterno entered the debate at age 83, after he became the first major college coach to win 400 games on November 6, 2010.
Right after the victory, he was interviewed on the field by “Heather” of ESPN. Starting at 1:33 seconds into the clip referenced below, here is the key dialogue:

Heather: “Coach Paterno, what has motivated you to get to this point?”

Paterno: “Oh geez, I don’t know—gettin’ paid.”

Source: YouTube clip at http://www.youtube.com/watch?v=jQzdVeYtm5w
(Note: the clip was posted on 11/6/10 by shellymic and has the title “Joe Pa FIRST to 400 Wins!”)

Taking Away Patents Would Be “Cutting Off the Hopes of Ingenious Men”

(p. 208) For Watt, the theft (as he saw it) of his work was a deeply personal violation. In (p. 209) 1790, just before realizing the extent of what he perceived as Hornblower’s theft of his own work he wrote,

if patentees are to be regarded by the public, as . . . monopolists, and their patents considered as nuisances & encroachments on the natural liberties of his Majesty’s other subjects, wou’d it not be just to make a law at once, taking away the power of granting patents for new inventions & by cutting off’ the hopes of ingenious men oblige them either to go on in the way of their fathers & not spend their time which would be devoted to the encrease [sic] of their own fortunes in making improvements for an ungrateful public, or else to emigrate to some other Country that will afford to their inventions the protections they may merit?

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: italics and ellipsis in original.)

Financial Gain an Important Motive for Invention

(p. 121) In 1930, Joseph Rossman, who had served for decades as an examiner in the U.S. Patent Office, polled more than seven hundred patentees. producing a remarkable picture of the mind of the inventor. Some of the results were predictable; the three biggest motivators were “love of inventing,” “desire to improve.” and “financial gain,” the ranking for each of which was statistically identical. and each at least twice as important as those appearing (p. 122) down the list, such as “desire to achieve,” “prestige,” or “altruism” (and certainly not the old saw, “laziness,” which was named roughly one-thirtieth as frequently as “financial gain”). A century after Rocket, the world of technology had changed immensely: electric power, automobiles, telephones. But the motivations of individual inventors were indistinguishable from those inaugurated by the Industrial Revolution.
. . .
In the same vein, Rossman’s survey revealed that the greatest obstacle perceived by his patentee universe was not lack of knowledge, legal difficulties, lack of time, or even prejudice against the innovation under consideration. Overwhelmingly, the largest obstacle faced by early twentieth-century inventors (and, almost certainly, their ancestors in the eighteenth century) was “lack of capital.” Inventors need investors.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: ellipsis added.)

Inventors Should Work Alone, Even If They Have to Moonlight

(p. 291) If you’re that rare engineer who’s an inventor and also an artist, I’m going to give you some advice that might be hard to take. That advice is: Work alone.

When you’re working for a large, structured company, there’s much less leeway to turn clever ideas into revolutionary new products or product features by yourself. Money is, unfortunately, a god in our society, and those who finance your efforts are businesspeople with lots of experience at organizing contracts that define who owns what and what you can do on your own.
But you probably have little business experience, know-how, or acumen, and it’ll be hard to protect your work or deal with all that corporate nonsense. I mean, those who provide the funding and tools and environment are often perceived as taking the credit for inventions. If you’re a young inventor who wants to change the world, a corporate environment is the wrong place for you.
(p. 292) You’re going to be best able to design revolutionary products and features if you’re working on your own. Not on a committee. Not on a team. That means you’re probably going to have to do what I did. Do your projects as moonlighting, with limited money and limited resources. But man, it’ll be worth it in the end. It’ll be worth it if this is really, truly what you want to do–invent things. If you want to invent things that can change the world, and not just work at a corporation working on other people’s inventions, you’re going to have to work on your own projects.
When you’re working as your own boss, making decisions about what you’re going to build and how you’re going to go about it, making trade-offs as to features and qualities, it becomes a part of you. Like a child you love and want to support. You have huge motivation to create the best possible inventions–and you care about them with a passion you could never feel about an invention someone else ordered you to come up with.
And if you don’t enjoy working on stuff for yourself–with your own money and your own resources, after work if you have to– then you definitely shouldn’t be doing it!

. . .

It’s so easy to doubt yourself, and it’s especially easy to doubt yourself when what you’re working on is at odds with everyone else in the world who thinks they know the right way to do things. Sometimes you can’t prove whether you’re right or wrong. Only time can tell that. But if you believe in your own power to objectively reason, that’s a key to happiness. And a key to confidence. Another key I found to happiness was to realize that I didn’t have to disagree with someone and let it get all intense. If you believe in your own power to reason, you can just relax. You don’t have to feel the pressure to set out and convince anyone. So don’t sweat it! You have to trust your own designs, your own intuition, and your own understanding of what your invention needs to be.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.
(Note: Italics and centered ellipsis in original.)