Classic article of the day (Health Care)

This article (1991) is wonderful to understand the historical relationship between technological change, insurance, and medical costs in the US. The title is "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment" (Burton Weisbrond, Journal of Economic Literature). 

Notice that the historical trade off has been between more innovation and higher prices and less innovation and lower prices. The author presents a pretty interesting theoretical framework to understand the pricing mechanism in the health industry. 

The author's argument has important implication for other industries as well, such as education. In fact, you will see the high contrast in the way prices are determined in the health care industry vs. in education. 

The article stands out in the health economics literature I have read so far.  

Economics of Innovation: The Effect of Prizes and Awards

These are excerpts from the conclusions of a new published paper by Brunt, Lerner, & Nicholas (Journal of Industrial Economics, December 2012): 

We have examined one of the longest available datasets of awards for innovation to determine whether prizes spurred technological development. We find that prizes induced competitive entry and that the largest effects are for prestigious medals. . .

Our historical evidence on RASE prizes offers guidance for the design of current inducement prize contests. Mega prizes, such as those offered by the X-Prize Foundation, presuppose that inventors are incentivized by large pecuniary inducements, but R&D costs typically exceed the value of the prize. For example, 26 teams competed for the X-Prize for suborbital spaceflight and collectively spent in excess of $100 million for a ten million dollar prize. Our evidence suggests that non-pecuniary prizes can be particularly effective. They avoid the complex process of linking the magnitude of the prize to the value of a particular technology and inventors are still able to appropriate by winning. The RASE contests offered free publicity and public approbation. Inventors could benefit from the seal of quality ascribed to the invention when selling or licensing their technologies. The RASE lowered administrative costs by using medals rather than financial awards. . . 

Our evidence suggests that in agricultural technologies, the prizes encouraged innovation beyond the patent system alone. . .

Insofar as policy changes require supporting empirical evidence, our findings suggest that inducement prizes for innovation can work.

The abstract:

We examine the effect of prizes on innovation using data on awards for technological development offered by the Royal Agricultural Society of England at annual competitions between 1839 and 1939. We find large effects of the prizes on competitive entry and we also detect an impact on patents, especially when prize categories were set by a strict rotation scheme, thereby mitigating the potentially confounding effect that they targeted only ‘hot’ technology sectors. Prizes encouraged competition and medals were more important than monetary awards. The boost to innovation we observe cannot be explained by the re-direction of existing inventive activity.

A draft of the paper (December 2011) is here.  

Intelligence

Two abstracts from the journal Intelligence: 

Biological correlates of northern–southern Italy differences in IQ 

The present study was intended to provide perspective, albeit less than unequivocal, on the research of Lynn (2010) who reported higher IQs in the northern than southern Italian regions. He attributes this to northern Italians having a greater genetic similarity to middle Europeans and southern Italians to Mediterranean people. Higher regional IQ was associated with biological variables more characteristic of middle European than Mediterranean populations (cephalic index, eye color, hair color, multiple sclerosis rates, schizophrenia rates). It was maintained, however, that very confident and definitive inferences regarding genetic regional differences in IQ are not warranted. Social conceptualized variables also correlated significantly with IQ so as to suggest the importance of nutrition and economic developmental status more generally.

IQs predict differences in the technological development of nations from 1000 BC through 2000 AD

National IQs and measures of technological development given by Comin, Easterly and Gong (2010) are presented for 133 nations for the year 1000 BC, for 134 nations for 0 AD, for 120 nations for 1500 AD and for 133 nations for 2000 AD. It is shown that national IQs are significantly correlated with national differences in technological development at 0.42 in 1000 BC, 0.18 in 0 AD, 0.63 in 1500 D, and 0.75 in 2000 AD.

I did not find the papers online.  

The productivity effects of barcode scanners

Barcode scanners were introduced in the 1970s as a way to reduce labor costs in stores, particularly at checkout. This paper is the first to estimate their effect on productivity. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scan- ners’ effect on labor productivity. I find that early scanners increased a store’s labor productivity, on average, by approximately 4.5 percent in the first few years, mostly due to a 15–17 percent increase in cashier productivity. Setup costs significantly offset the short-run productivity effect.

That is from a paper by Emek Basker published in the new number of The Journal of Applied Economics. A graph from the paper:

The draft of the paper is here. 

Technology and human development

From a new paper by David Mayer-Foulkes. HT: Viviana Di Giovinazzo. 

The sample includes 135 countries. 

The author explains:

I construct a technology index TECH using a polychoric principal component analysis of number of articles, number of computers, internet subscribers patents by residents, R&D researchers and technicians, mainline telephone subscribers and mobile telephone subscribers, each of these as a proportion of the population.

The review of the human-development literature in the paper is very good.