A serious discussion of the role of barter in health care

Last week I suggested that someone should dig into candidate Lowden's suggestion more deeply. I'm glad to say someone has.

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I'm amazed that no one in the audience seemed to know what a chicken ranch was.

David Brooks' 100K statistic explained

If you follow this sort of thing, you may recall that a few weeks ago, David Brooks claimed that "Over the last 10 years, 60 percent of Americans made more than $100,000 in at least one of those years, and 40 percent had incomes that high for at least three." based on research by Stephen J. Rose. It was one of those statistics that just looks wrong and it turns it was, though the fault seems to lie mainly with Rose's less-than-clear prose and his algorithm for calculating adjusted household income for individuals (an individual living alone could make considerably less than six figures and still have an adjusted household income of 100K).

Andrew Sprung (who was on this from the beginning) has the details:

I should not have cast my inference that Brooks was misquoting Rose as a near-certainty without being able to verify it. Literally, there was no misquote -- or rather a minor one, converting Rose's "fully 60 percent of adults had at least one year in which their incomes were at least $100,000" to a more active verb formulation: "Over the last 10 years, 60 percent of Americans made more than $100,000." Brooks' re-cast also edits out a ghost of pronoun slippage in Rose's studiedly vague formulation: "adults" had years in which "their" incomes were over $100k. While "their" grammatically agrees with "adults," keeping both in the plural somehow highlights the elision by which household income (the term Rose uses in earlier writings citing similar statistics) becomes the income enjoyed by the individuals in the household.

(h/t to Brad DeLong)

Fitness Landscapes, Ozark Style

[Update: part two is now up.]

I grew up with a mountain in my backyard... literally. It wasn't that big (here in California we'd call it a hill) but back in the Ozarks it was a legitimate mountain and we owned about ten acres of it. Not the most usable of land but a lovely sight.

That Ozark terrain is also a great example of a fitness landscape because, depending on which side you look at, it illustrates the two serious challenges for optimization algorithms. Think about a mountainous area at least partially carved out by streams and rivers. Now remove all of the rocks, water and vegetation drop a blindfolded man somewhere in the middle, lost but equipped with a walking stick and a cell phone that can get a signal if he can get to a point with a clear line of sight to a cell tower.

With the use of his walking stick, the man has a reach of about six feet so he feels around in a circle, finds the highest point, takes two paces that direction then repeats the process (in other words, performs a gradient search). He quickly reaches a high point. That's the good news; the bad news is that he hasn't reached one of the five or six peaks that rise above the terrain. Instead, he has found the top of one of the countless hills and small mountains in the area.

Realizing the futility of repeating this process, the man remembers that an engineer friend (who was more accustomed to thinking in terms of landscape minima) suggested that if they became separated he should go to the lowest point in the area so the friend would know where to look for him. The man follows his friend's advice only to run into the opposite problem. This time his process is likely to lead to his desired destination (if he crosses the bed of a stream or a creek he's pretty much set) but it's going to be a long trip (waterways have a tendency to meander).

And there you have the two great curses of the gradient searcher, numerous small local optima and long, circuitous paths. This particular combination -- multiple maxima and a single minimum associated with indirect search paths -- is typical of fluvial geomorphology and isn't something you'd generally expect to see in other areas, but the general problems of local optima and slow convergence show up all the time.

There are, fortunately, a few things we can do that might make the situation better (not what you'd call realistic things but we aren't exactly going for verisimilitude here). We could tilt the landscape a little or slightly bend or stretch or twist it, maybe add some ridges to some patches to give it that stylish corduroy look. (in other words, we could perturb the landscape.)

Hopefully, these changes shouldn't have much effect on the size and position of the of the major optima,* but they could have a big effect on the search behavior, changing the likelihood of ending up on a particular optima and the average time to optimize. That's the reason we perturb landscapes; we're hoping for something that will give us a better optima in a reasonable time. Of course, we have no way of knowing if our bending and twisting will make things better (it could just as easily make them worse), but if we do get good results from our search of the new landscape, we should get similar results from the corresponding point on the old landscape.

In the next post in the series, I'll try to make the jump from mountain climbing to planning randomized trials.

* I showed this post to an engineer who strongly suggested I add two caveats here. First, we are working under the assumption that the major optima are large relative to the changes produced by the perturbation. Second our interest in each optima is based on its size, not whether it is global. Going back to our original example, let's say that the largest peak on our original landscape was 1,005 feet tall and the second largest was 1,000 feet even but after perturbation their heights were reversed. If we were interested in finding the global max, this would be be a big deal, but to us the difference between the two landscapes is trivial.

These assumptions will be easier to justify when start applying these concepts in the next post in the series. For now, though, just be warned that these are big assumptions that can't be made that often.

And my second favorite quote on lying

Comes from Dashiell Hammett (who, of course, had his own Hellman connection). You'll find it in the Continental Op story, "Golden Horseshoe."

"I was reading a sign high on the wall behind the bar:

ONLY GENUINE PRE-WAR AMERICAN AND BRITISH WHISKEYS SERVED HERE

I was trying to count how many lies could be found in those nine words, and had reached four, with promise of more."

Distributions and outliers

John Cook has an old but good post on the issues that even well behaved normal distributiosn can have have in the extremes. I would tend to argue that these extreme outliers (women over 6' 8", for example) probably are due to some process that is rare (i.e. a genetic mutation, an extreme environmental exposure) and so the real height distribution is a mixture of several underlying distributions with latent (or unobserved variables).

But this line of thinking is actually dangerous. After all, with enough latent variables I can model almost any distribution as a sum of normal distributions. And, if I can't observe these variables, how do I know that they exist?

So I guess this is one place where my intuitions are precisely wrong for handling the problem.

Best quote ever on lying

Matt Springer's review got me to thinking about Mary McCarthy's take on Lillian Hellman

"Every word she writes is a lie, including and and the."

(with thanks to the good people at wikiquotes)

Fox News covers quantum physics. What could possibly go wrong?

Via Felix Salmon, Matt Springer thinks he has a winner:

The Worst Physics Article Ever

Ladies and gentlemen, I give you the worst physics news article I have ever seen:

Freaky Physics Proves Parallel Universes Exist

Every word in the title is wrong but "physics". It's not freaky, doesn't prove anything we didn't already know, and has nothing to do with parallel universes nor does it shed any light the question of their possible existence.

Look past the details of a wonky discovery by a group of California scientists -- that a quantum state is now observable with the human eye -- and consider its implications: Time travel may be feasible. Doc Brown would be proud.

Quantum states are visible to the naked eye all the time. Neon signs, laser pointers, and all kinds of other devices show quantum behavior at the macroscopic level. What this UC Santa Barbara group has done is impressive and important - they've put a tiny but macroscopic object into a superposition of macroscopic quantum states. This is a big deal, but the difference between this and everyday single-atom quantum
mechanics is just one of scale. It's not new physics. And time travel? It's a category error on the scale of a reporter watching the Ottawa Senators play hockey and writing an article claiming they were the new lawmaking body of Canada.

Read more here.

In games of perfect information, bluffing is a really bad idea

But that seems to be the Republican strategy on financial reform. Jonathan Chait has the details:

So wait. Republicans think they can limit the political damage of a filibuster if they reach a bipartisan deal. But what incentive do the democrats have to reach a deal? If they can force the Republicans to maintain a filibuster, why not keep the issue going until November? The strategy here seems to be, take a political hit by opposing popular legislation, and then hope that somehow this will strengthen the party's hand in the negotiations to follow. How will this work? It's like trying to bluff your opponent in poker when both you and he know he has the stronger hand.

What's more, Republicans are no longer even pretending to be able to hold the line after today's vote. This is amazing:

McConnell secured a commitment from his conference to hold together in opposition on the first vote, but all bets are off after that, aides acknowledge. McConnell’s challenge after Monday is preventing moderates such as Snowe and Sen. Susan Collins (R-Maine) from breaking away and weakening Republican leverage.

Now that the Democrats know the Republicans are planning to defect after the first vote, why on Earth would they compromise? Moreover, what is the point of taking the hit by filibustering reform in the first place? It could work, in theory, if you could bluff the Democrats into thinking the GOP might hold the line indefinitely. But I'm pretty sure the Democratic party has access to articles published in Politico, which means the jig is up. So now the Republicans are trying to bluff in poker when they and their opponent know they have the weaker hand, and their opponent has heard them admit that their strategy is to bet for a couple rounds and fold before the end. Why not just cut their losses now? This makes zero sense.

The roots of Apple's business model

Click for the punchline.

"Any color you want as long as it's black"

Following up on Joseph's post, I have two points about SAS's graphics:

First, as bad as they are now, you should have seen them in the early Nineties;

Second, I think the graphics are a pretty good indication of the culture of SAS, a large, privately-held company with an effective monopoly over much of its market. SAS does good work and has an incredible record of innovation but is (in the words of some of its employees) a benevolent dictatorship. The company's attitude has always been we will decide what you need and what's a fair price for it.

I don't mean this as a slam against SAS. After almost twenty years you can put me down as a satisfied customer. It's a good company to work with and, by all accounts, a great company to work for. I don't think going public would make SAS a better company, but I do think it would make it do some things better.

SAS graphics

Okay, it is barely possible to make a decent looking SAS graphic with a half page of code, painfully specified to remove the abjectly painful default look. So imagine my susrpise when R and STATA do good looking graphics with a one line command. Sure, it might occasionally be a long line but still . . . Even EXCEL does this a lot better.

Why is SAS different?

It might seem like a minor point but there is a fair bit of truth to the idea that (easy to use) graphical represenations of data are extremely helpful.

The longer I work with SAS (since 1997) the more I wonder about this . . .

Weight of evidence

One of the annoying things in bio-medicine is that we often cannot replicate findings in a quick or efficient way. Unlike, for example, many areas of physics, an unusual finding can't be looked at quickly. So what do you do with a marginal finding?

Say for example, p=0.045 and conservative analytic approaches (such as BMA or LASSO regression) exclude this parameter?

If you publish it then you risk it being oversold and creating confusion.

If you don't publish it then you might join a long list of other people who ignore an important association.

Both alternatives seem unsatisfactory in the absence of a "hypothesis generation" tag for papers. I like the clinical pharmacology literature for these papers as the best of the alternatives but wish that it'd be cleaner.

A chicken in every pot, a couple more for your HMO

Sue Lowden, the candidate who is currently on track to become the next senator from Nevada recently said about health care:

"And I would have suggested, and I think that bartering is really good. Those doctors who you pay cash, you can barter, and that would get prices down in a hurry. And I would say go out, go ahead out and pay cash for whatever your medical needs are, and go ahead and barter with your doctor."

My first thought was that she meant 'barter' in the figurative sense, that patients should try to cut a deal with their doctors, not that patients should literally give doctors goods and services in lieu of cash.

I was mistaken:

The campaign of Senate candidate Sue Lowden (R-NV) is continuing to stand by Lowden's call for the use of the barter system as a means to bring down health care costs.

On Monday, Lowden doubled down on the barter idea: "You know, before we all started having health care, in the olden days, our grandparents, they would bring a chicken to the doctor. They would say I'll paint your house."

[TPM] asked Lowden spokesperson Crystal Feldman how this could ever be a workable policy, in an era of costly procedures, tests, pharmaceuticals and provider networks? "Americans are struggling to pay for their health care, and in order to afford coverage we must explore all options available to drive costs down," Feldman told TPMDC in an e-mail.

Feldman continued: "Bartering with your doctor is not a new concept. There have been numerous reports as to how negotiating with your doctor is an option and doctors have gone on the record verifying this. Unfortunately, Harry Reid's failed leadership forces us to take drastic measures. The fact remains that instead of producing a health care solution Americans support, Harry Reid spends his time focusing on attacking his biggest threat to another six years in Washington, Sue Lowden."

Aside from comic potential here (there are a lot of services you can barter for in Nevada), this suggests an interesting thought experiment:

Assuming that medical costs were driven by individual doctors and not by hospitals and drug companies (which really can't be bartered with), what would the introduction of barter do to the economics of health care? I would think that the introduction of wide-scale bartering would make the market less efficient and would produce more maldistribution of resources. Is this always true or is this another case where the strange economics of health care produce counter-intuitive results? And what would the other consequences be?

Given that there are approximately eight gazillion economics blogs out there, is there any chance that someone who knows what he or she is talking about could answer this one for us?

Financial reporting done right

With relevant facts, important context, smart commentary and lots of obscenity (some of which is not that effectively bleeped out so you might want to wait until you get home to watch this).

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Journal Impact Factors

Candid Engineer has a post on impact factors. I find the variability of impact factors by field quite frustrating as it often neglects the field specific differences in publication style. Take, for example, the field of statistics. I have yet to find a statistician who would not be proud of an article in the Journal of the American Statistical Society (JASA). It has an impact factor of 2.3; this does not compare favorably with (for example) Epidemiology (IF=5.4) which also publishes methodological papers. But the impact factor approach understates the effort required to beuild on or develop methods -- more sophisiticated methods take a lot longer to work their way into the literature.

In any case, comparing JASA to the New England Journal of Medicine (IF=50!!) makes it clear that the field has a lot to do with the impact of a journal.

So what do you do when you are on the borders of a field?

It's a tricky problem . . .