The NYT ran a column highlighting new research by Tim Bartik and Brad Hershbein showing that the earnings premium from graduating college is not the same for everyone. Specifically, the research finds that the premium is lower for people from lower-income families than for people from middle-income families.
It is good to see this divergence in experiences getting attention in the paper. While this has been known to researchers for many years (see this 2010 piece by John Schmitt and Heather Boushey), the NYT in general, and columnist David Leonhardt in particular, have often presented increased college attendance as a panacea for income inequality.
As that paper showed, there was a growing divergence in income outcomes for college graduates among men. (This was less the case among women.) Many, many college grads earned less than high school grads, suggesting that they had gained little income by going to college. Since many incurred substantial debt, college was likely, on net, a losing proposition for them economically.
Also, many people who enter college do not graduate. When the risk of not graduating is taken into account, it is understandable that many young men have chosen not to attend college. Hopefully, this more recent research will make the basic facts about college and earnings more widely known to people in policy circles.
The NYT ran a column highlighting new research by Tim Bartik and Brad Hershbein showing that the earnings premium from graduating college is not the same for everyone. Specifically, the research finds that the premium is lower for people from lower-income families than for people from middle-income families.
It is good to see this divergence in experiences getting attention in the paper. While this has been known to researchers for many years (see this 2010 piece by John Schmitt and Heather Boushey), the NYT in general, and columnist David Leonhardt in particular, have often presented increased college attendance as a panacea for income inequality.
As that paper showed, there was a growing divergence in income outcomes for college graduates among men. (This was less the case among women.) Many, many college grads earned less than high school grads, suggesting that they had gained little income by going to college. Since many incurred substantial debt, college was likely, on net, a losing proposition for them economically.
Also, many people who enter college do not graduate. When the risk of not graduating is taken into account, it is understandable that many young men have chosen not to attend college. Hopefully, this more recent research will make the basic facts about college and earnings more widely known to people in policy circles.
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Kevin Roose had a piece in the NYT about the large number of tech companies that are going public without ever having made a profit. As the piece points out, the strategy is to use low prices to build up a large market niche and then jack up prices once people become dependent on the company.
Roose touts Amazon as a successful model for this strategy:
“Those years of investments paid off, and Amazon is now the second most valuable company in the world, with $1.6 billion in profit last quarter alone.”
While it’s fine for a company to make $1.6 billion in profit for a quarter, Amazon now has a market capitalization of more than $780 billion. Assuming its other quarters are equally profitable, the company has a price to earnings ratio of more than 120 to 1. In order for Amazon’s stock price to make sense, its profits will have to increase by almost a factor of ten from its current level. While this could happen, Roose may want to find another company as an example where its profit growth has already managed to justify the price shareholders paid for the company.
Kevin Roose had a piece in the NYT about the large number of tech companies that are going public without ever having made a profit. As the piece points out, the strategy is to use low prices to build up a large market niche and then jack up prices once people become dependent on the company.
Roose touts Amazon as a successful model for this strategy:
“Those years of investments paid off, and Amazon is now the second most valuable company in the world, with $1.6 billion in profit last quarter alone.”
While it’s fine for a company to make $1.6 billion in profit for a quarter, Amazon now has a market capitalization of more than $780 billion. Assuming its other quarters are equally profitable, the company has a price to earnings ratio of more than 120 to 1. In order for Amazon’s stock price to make sense, its profits will have to increase by almost a factor of ten from its current level. While this could happen, Roose may want to find another company as an example where its profit growth has already managed to justify the price shareholders paid for the company.
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Austin Frakt had an interesting NYT Upshot piece noting that the US leads the world in health care spending per capita, but badly trails most other wealthy countries in life expectancy. He notes this divergence began in 1980.
While that is true in terms of life expectancy, the divergence in spending actually began in the 1970s. According to the OECD, the United States was near, but not at the top, in terms of health care spending as a share of GDP. Both Canada and Denmark devoted a larger share of their GDP to health care. While the difference with Canada was small, the difference with Denmark was more than 1.2 percentage points of GDP for 1971, the first year that data are available.
By 1980, the gap with Denmark had fallen to less than 0.2 percentage points of GDP, while US spending as a share of GDP exceeded Canada’s by 0.6 percentage points. Insofar as there is a mystery about US health care spending, as the headline asserts, it seems to have begun in the 1970s rather than the 1980s.
One other point is worth noting in reference to this piece. At the end, as one potential solution to high costs in the US, the piece suggests more competition. That would be great (starting with an end to government-granted patent monopolies in prescription drugs and medical equipment), but another even more simple route is increased medical travel.
If people facing expensive medical procedures could travel to other countries and share in the savings it would directly lower costs. Furthermore, by reducing demand in the United States it should put downward pressure on prices. However, the most important effect is that it would make more people aware of the fact that people in other countries get high-quality care for prices that are often less than half of what we pay in the United States.
Austin Frakt had an interesting NYT Upshot piece noting that the US leads the world in health care spending per capita, but badly trails most other wealthy countries in life expectancy. He notes this divergence began in 1980.
While that is true in terms of life expectancy, the divergence in spending actually began in the 1970s. According to the OECD, the United States was near, but not at the top, in terms of health care spending as a share of GDP. Both Canada and Denmark devoted a larger share of their GDP to health care. While the difference with Canada was small, the difference with Denmark was more than 1.2 percentage points of GDP for 1971, the first year that data are available.
By 1980, the gap with Denmark had fallen to less than 0.2 percentage points of GDP, while US spending as a share of GDP exceeded Canada’s by 0.6 percentage points. Insofar as there is a mystery about US health care spending, as the headline asserts, it seems to have begun in the 1970s rather than the 1980s.
One other point is worth noting in reference to this piece. At the end, as one potential solution to high costs in the US, the piece suggests more competition. That would be great (starting with an end to government-granted patent monopolies in prescription drugs and medical equipment), but another even more simple route is increased medical travel.
If people facing expensive medical procedures could travel to other countries and share in the savings it would directly lower costs. Furthermore, by reducing demand in the United States it should put downward pressure on prices. However, the most important effect is that it would make more people aware of the fact that people in other countries get high-quality care for prices that are often less than half of what we pay in the United States.
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Since I and others have raised questions about Jeff Bezos–owned paper’s boosterism of Amazon when it comes to the location of the company’s second headquarters, it is worth calling attention to this very fair piece that points out some of the downsides of having Amazon in the DC area. There are two issues that might have been worth more attention.
The piece notes that the specifics of the incentives being offered by the District of Columbia and Northern Virginia have not been made public. This certainly raises the possibility that the hit to budgets in these areas could be very large if Amazon were to choose either as a destination. While the secrecy is noted, it would have been worth making the point about this risk more explicit.
The other is that the company is openly using the threat of moving jobs to get Seattle to reduce or eliminate a payroll tax it is considering for large companies. This certainly raises the possibility that Amazon may engage in similar behavior if it locates in the DC area and one or more of the governments attempts to raise taxes to meet public needs.
Since I and others have raised questions about Jeff Bezos–owned paper’s boosterism of Amazon when it comes to the location of the company’s second headquarters, it is worth calling attention to this very fair piece that points out some of the downsides of having Amazon in the DC area. There are two issues that might have been worth more attention.
The piece notes that the specifics of the incentives being offered by the District of Columbia and Northern Virginia have not been made public. This certainly raises the possibility that the hit to budgets in these areas could be very large if Amazon were to choose either as a destination. While the secrecy is noted, it would have been worth making the point about this risk more explicit.
The other is that the company is openly using the threat of moving jobs to get Seattle to reduce or eliminate a payroll tax it is considering for large companies. This certainly raises the possibility that Amazon may engage in similar behavior if it locates in the DC area and one or more of the governments attempts to raise taxes to meet public needs.
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Donald Trump is relying on a silly myth in his latest pharmaceutical industry America First crusade. He is claiming that because other countries don’t give our drug industry unchecked patent monopolies, we are subsidizing research for them. The numbers disagree.
According to the National Science Foundation, our pharmaceutical industry spent $62.5 billion on research worldwide in 2013, the most recent year for which data are available. If we increase this by 25 percent to account for growth between 2013 and 2017, we get $78.3 billion. Worldwide sales last year were just under $1 trillion.
If just half of these sales were by U.S. companies, it would translate into just under $500 billion in sales. This would mean that the industry’s research expenditures were equal to less than 16 percent of its sales. Prices in other wealthy countries are generally in the range of 40 to 60 percent of the U.S. price. Since the cost of manufacturing and delivering the drugs is generally less than 10 percent of the U.S. sales price, and often less than 1 percent, the industry should easily be able to recover its research expenditures if the whole world paid the regulated prices in other countries rather than the U.S. government imposed monopoly prices.
In other words, there is not really a plausible story on how Trump’s efforts to force other countries to pay higher prices will lead to lower drug prices in the United States. On the other hand, insofar as Trump suceeds, it will lead to higher industry profits.
Donald Trump is relying on a silly myth in his latest pharmaceutical industry America First crusade. He is claiming that because other countries don’t give our drug industry unchecked patent monopolies, we are subsidizing research for them. The numbers disagree.
According to the National Science Foundation, our pharmaceutical industry spent $62.5 billion on research worldwide in 2013, the most recent year for which data are available. If we increase this by 25 percent to account for growth between 2013 and 2017, we get $78.3 billion. Worldwide sales last year were just under $1 trillion.
If just half of these sales were by U.S. companies, it would translate into just under $500 billion in sales. This would mean that the industry’s research expenditures were equal to less than 16 percent of its sales. Prices in other wealthy countries are generally in the range of 40 to 60 percent of the U.S. price. Since the cost of manufacturing and delivering the drugs is generally less than 10 percent of the U.S. sales price, and often less than 1 percent, the industry should easily be able to recover its research expenditures if the whole world paid the regulated prices in other countries rather than the U.S. government imposed monopoly prices.
In other words, there is not really a plausible story on how Trump’s efforts to force other countries to pay higher prices will lead to lower drug prices in the United States. On the other hand, insofar as Trump suceeds, it will lead to higher industry profits.
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The second paragraph of an article on a new requirement in California — that all new homes have solar power — told readers:
“It will add thousands of dollars to the cost of home when a shortage of affordable housing is one of California’s most pressing issues.”
It then added:
“That made the relative ease of its approval — in a unanimous vote by the five-member California Energy Commission before a standing-room crowd, with little debate — all the more remarkable.”
The piece then goes on to explain that the energy savings are likely to far exceed the additional costs of the solar installations over the life of a standard mortgage. Given this evidence, it might have been reasonable for the second paragraph to say something like:
“In spite of increasing construction costs, the savings on energy likely mean that the requirement will reduce the cost of home ownership, which is an important issue given the shortage of affordable housing in California.”
That might have left readers with a different view of the new regulation.
The second paragraph of an article on a new requirement in California — that all new homes have solar power — told readers:
“It will add thousands of dollars to the cost of home when a shortage of affordable housing is one of California’s most pressing issues.”
It then added:
“That made the relative ease of its approval — in a unanimous vote by the five-member California Energy Commission before a standing-room crowd, with little debate — all the more remarkable.”
The piece then goes on to explain that the energy savings are likely to far exceed the additional costs of the solar installations over the life of a standard mortgage. Given this evidence, it might have been reasonable for the second paragraph to say something like:
“In spite of increasing construction costs, the savings on energy likely mean that the requirement will reduce the cost of home ownership, which is an important issue given the shortage of affordable housing in California.”
That might have left readers with a different view of the new regulation.
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The NYT did some serious editorializing in a headline that told readers:
“[…]to lower drug costs at home, Trump wants higher prices abroad.”
Sorry folks, the NYT does not know what Trump wants. In fact, a reasonable first guess might be that Trump wants to increase the profits of the pharmaceutical industry, with whom he is very close. The NYT would be on sounder footing with a headline saying “To increase pharmaceutical industry profits, Trump wants foreigners to pay more for drugs.” This headline more closely corresponds to the known facts, but we know the paper doesn’t like attributing motives, except of course when it does.
It is worth noting that the headline writer is following the article which told readers in the first paragraph that Trump:
“[…]has an idea that may not be so popular abroad: Bring down costs at home by forcing higher prices in foreign countries that use their national health systems to make drugs more affordable.”
Why is it so hard for reporters to just report what politicians say and do and not try to tell us what they are thinking?
The NYT did some serious editorializing in a headline that told readers:
“[…]to lower drug costs at home, Trump wants higher prices abroad.”
Sorry folks, the NYT does not know what Trump wants. In fact, a reasonable first guess might be that Trump wants to increase the profits of the pharmaceutical industry, with whom he is very close. The NYT would be on sounder footing with a headline saying “To increase pharmaceutical industry profits, Trump wants foreigners to pay more for drugs.” This headline more closely corresponds to the known facts, but we know the paper doesn’t like attributing motives, except of course when it does.
It is worth noting that the headline writer is following the article which told readers in the first paragraph that Trump:
“[…]has an idea that may not be so popular abroad: Bring down costs at home by forcing higher prices in foreign countries that use their national health systems to make drugs more affordable.”
Why is it so hard for reporters to just report what politicians say and do and not try to tell us what they are thinking?
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