Insure us all

Busy, busy, busy of late. It'll probably continue for another couple of weeks -- until finals wrap up. In the meantime, ...

I'm commented before on insurance markets. In case you've never thought about it, insurance is designed to spread the risk of catastrophe over large numbers of people. You pay a "small" premium to protect you from the "large" consequence should the dreaded event occur. You pay in because you know you just might need it yourself one day -- though you probably won't. If insurance was a "good buy" (I interpret that as meaning you get back at least what you pay) for everyone, then no insurance fund could ever remain solvent.

What sparked this primer on basic insurance? A column in USA Today on "price gouging" in the insurance industry. Now I will admit that collusive activities and attempts to fix prices are possible in the insurance industry, but Al Neuharth (the founder of USA Today) never presents any evidence of such activity. No he just wants to rail against the evil insurance companies who are ripping off homeowners in disaster-prone areas:

The hurricane season officially ends today. Despite dire predictions from forecasters last spring, the USA was virtually unhit for the second straight year, with only one minor Category 1 hit in Texas.

But millions of coastal homeowners from Florida to New York continue to get heavy hits from insurance companies.

Rocky Scott, public information officer for Florida's Citizens Property Insurance Corp., provides this perspective:


* Since Hurricane Katrina in 2005, some private hurricane insurers have raised rates in coastal states by as much as 300%.


* Even state-sponsored Citizens Property Insurance, based in Florida, has increased premiums by up to 150%.

Insurance company rip-offs aren't limited to hurricanes. Homeowners hit by other weather catastrophes — blizzards, earthquakes, floods, tornadoes — often get similar shocks.

So let me see if I understand Mr. Neuharth's reasoning. After a couple of years of huge payouts to homeowners affected by hurricanes, insurance companies are raising rates A LOT. Despite the accusations of price gouging, there are a few other explanations. Yes, it could be that the insurers are taking advantage of homeowners -- given the limited number of "big players" in the insurance industry, I'd say the degree of true competition is limited. On the other hand, it could be that insurers are now realizing the expected payoff on a hurricane-prone home is a lot higher than they thought. What would be the rational response? A rate increase seems logical in that context.

Now I'm not saying 300% increases are appropriate. I'm also not saying they're not. I don't know. I just think it's a little silly to immediately accuse the insurance companies of malfeasance without evidence. I do know (or at least I've heard from friends with knowledge) that many companies have simply stopped insuring homes on the AL coast. If, as Mr Neuharth claims, hurricane homes represent a cash cow for insurance companies, why would companies be fleeing the market?

Regardless, Neuharth offers a solution:

Former Florida insurance commissioner Tom Gallagher advocated a federal catastrophe insurance program financed by premiums nationwide to help pay for weather-related disasters anywhere across the USA.

[...]

I'm all for free enterprise. Usually when politicians step in with things like price-wage controls, it's a mistake. But as a longtime beachfront homeowner, I'm reluctantly convinced the federal government must intervene to rein in insurance gougers. Skyrocketing premiums are a bigger threat to more homeowners than the variable-rate mortgage foreclosures.

First, it always scares me when someone starts a sentence with a phrase like, "I'm all for free enterprise." Just as "I'm not a racist," "I'm all for free trade," and "It's not that she's a woman," sometimes make me suspect the speaker may be a racist, isolationist woman-hater, "I'm all for free enterprise," makes me think Mr. Neuharth is about to show he is not, in fact, in favor of free enterprise.

Second, after reading the rest of the paragraph I don't see any reason he'd be against free enterprise. He admits government imposed price controls usually (his word) are a mistake, but he gives no evidence for why they would NOT be a mistake in this case. Wait; he does. I see it now. "But as a longtime beachfront homeowner ..." I suspect that's what has made Mr. Neuharth abandon his free enterprise principles in this instance.

Third, think of the logical implications of this whole argument. If insurers truly are engaged in collusive behavior to expropriate monopoly profits from homeowners, then there is a case for government intervention. Even Mr. Neuharth, though, points out that Florida's "state-sponsored" insurance fund increased premiums by up to (another phrase I abhor in arguments) 150%. It seems to me the insurance market may be sending a basic economic lesson to "longtime beachfront homeowners": Your desired behavior is costly. If you want to engage in it, you'd better be ready to pony up some jack. The result? Fewer people would build houses on the beach. Those that did would be wealthy enough to pay the premiums or replace their homes on their own. That may seem unfair, but is there an inherent right for Everyman to be able to afford a beach house?

So how about the alternative? What would a national "weather-related disaster insurance fund" do? Well first it would insulate homeowners from paying the full cost of their behavior. It would NOT, however, reduce the cost of rebuilding homes and businesses (over and over for some locations) after hurricanes. It would just spread that cost over more and more people. Who are these people? Us. All of us. American taxpayers. Well at least it would keep beachfront property ownership more egalitarian, right? Nope. Yes, some "common" folks can afford beach property right now, but what happens to the desirability of that property if hurricane insurance becomes a lot cheaper? The property becomes much more attractive and the price of the property will be bid up by, I suspect, an amount roughly equivalent to the "savings" from the insurance program.

So what would we end up with? I suspect it'd look a whole lot like the government-sponsored flood insurance program. It's a bit dated, but John Stossel once did a really nice job on that program. [If you've never seen it, it's well worth reading.]

Tickle me kindle

I know there've been multiple attempts to produce and market a functional, user-friendly electronic book reader and I've been skeptical of them all. Most importantly, I HATE reading long documents on a computer screen and I can't imagine reading a whole book that way. Given that, I have to admit that I'm intrigued by the kindle.

I haven't seen one in person, but I'm really excited by the "paper-like" reading screen. They claim no backlit, eye fatigue inducing computer screen. The best I understand, the screen is imbedded with actual ink particles that rearrange themselves to represent each new page. I may have misunderstood that, but it sounds way cool to me.

I'm still skeptical, but I have a perhaps irrational level of optimism for this product -- primarily because it's being pushed by the Amazon guy. It's hard to argue with his track record. While I'm almost never an early adopter, I'd be tempted by this product. If not for the price. I just can't see dropping $400 on it. Once they figure out the PDF thing and its price drops 25-50%, though; well I might just jump on board. Mostly I just hope the initial version is successful enough to spawn a version 2.0.

Around the blog world

Some things I saw surfing the blog world today ...

Given the post below -- the one about Children of Men -- I found this note over at Marginal Revolution interesting:

An indigenous language in southern Mexico is in danger of disappearing because its last two speakers have stopped talking to one another.

Now it's not as juicy as it sounds. It seems they're not "not talking to each other" because of a feud so much as they've just drifted apart. Still, that kind of sucks. One of the comments, though, claims there still are as many as 90,000 speakers of the language so it could be journalistic hyperbole. Who knows?

Over at Sabermetric Research there's a post about a paper claiming to show that batters with a surname beginning with the letter K (the baseball scoring symbol for strikeout) strike out more often than other batters. Though I haven't seen the paper itself, I fear this is one of those cases that gives statistics a bad name. You know, one of those "lies, damned lies, and statistics" kind of things. I have no proof, but I suspect it's a case of a very large sample size, which results in VERY small standard errors, which then makes almost every result "statistically significant". As I remind my students, there is a tremendous difference in statistical significance and practical significance. Still, I'd like to see the paper before making a final judgement.

Finally, my old pal The Vol Abroad shares 8 random facts about herself. Knowing her as I do, I was not at all surprised by how witty her facts were. My favorite:

5. I have SunDrop in my house right now. It's liquid gold. I only refrigerate one can at a time so I don't go through it too quick. My husband put an empty can in our transparent recycling bag, and I grant is a perfectly normal thing to do. But I had this paranoid fear that some SunDrop addict would walk by our house, see it and then break into our house to steal my stash. That's the grip SunDrop has on you.

Though I don't have the Drop addiction I had as a younger man, I can certainly appreciate the extremely high marginal utility a can/bottle of the "nectar of the gods" would have if I lived in a foreign (heathen?) land where it was not available.

The whole thing got me to thinking about random (perhaps surprising?) facts about me. I figured I'd share some, but with a twist. Here's a mixture of "true facts" (aka, facts) and "false facts" (aka, lies). If you know me well, you may have no trouble separating the two, but I'm still curious about how easy I am to peg.

1. If the election were held today, I'd vote for Hillary.
2. I am an occasional (secret) watcher of American Idol.
3. I speak 2 languages (including English) well enough to get by (if the natives are patient) and I know the "clueless tourist" version of 1 more.
4. My favorite current author is an obscure (at least in America) Japanese writer.
5. I own a Beastie Boys CD (you know the song).
6. I believe steroids have made most baseball records of the past 15-20 years meaningless.
7. Though incredibly vulgar, Clerks is one of my all-time favorite movies.
8. My first "favorite song" as a child was Rhinestone Cowboy.

When I did these off the top of my head, I had 5 "trues" and 3 "falses". For symmetry's sake, I changed a fact to a lie so now there's 4 of each. If there's any interest, I will reveal the true me later.

Movie vs. book

When there's a movie based on a book, I usually come down FIRMLY on the side of the book. On occasion, though, there are times when I think both simply are wonderful (e.g., Breakfast at Tiffany's and Breakfast at Tiffany's). There are even rare occasions when I think the movie is better (e.g., Field of Dreams really was superior to Shoeless Joe).

Sometimes, though, the movie is so different from the book, it's pointless to compare the two. What brought this on? Some months ago I saw the movie, Children of Men -- based on the book by P.D. James. Yes, I said P.D. James.

I saw the movie because I was intrigued by the story and the critics loved it. Not only did they love it, they praised it for things I usually enjoy in movies. Regardless, I saw it and I enjoyed it -- though not nearly as much as I'd been led to believe I would. The other day I was in my school's library and I ran across a copy of the book. I figured I'd read the book and see how it held up. Well it turns out the book is MUCH different! The basic story -- the world is dying because no one on the planet has had a baby in close to 30 years -- and character names are the same, but that's where the similarities end. I find it hard even to say the movie was based on the book. I think it's one of those cases where they should have claimed "inspired by" rather than "based on," but maybe that's just me.

Anyway, ... The book is fabulous. Though there is an "action story" to keep things moving, the "theme" of the book seems to be how people and society change once they have no future to live for. It's not just that individuals don't have heirs to bequest their riches to, it's that society itself realizes there is nothing to work toward. I found it chilling and engrossing. Don't let the fact that it's a P.D. James book throw you; read this book.

Also of note in movies, I just recently saw Lost in Translation and I thought it was every bit as good as claimed. It did drag for a while, but the final 30 minutes or so saved the movie. I don't know if it was as good as Sofia Coppola's directorial debut (The Virgin Suicides -- another one where the movie might have been better than the book), but it was well worth watching.

Something interesting

The guys over at Marginal Revolution have a brief, but I think well reasoned, post on the "repugnance" of selling organs for transplant. I know it's got to be more complicated, but it really does seem hard to justify continuing a policy that results in "[l]etting thousands of people die while organs that could have saved their lives were buried and burned."

I think you can craft a well-reasoned argument against selling organs -- perverse incentives for hospitals, a rise in "organ mugging", etc. -- but what strikes me is that most of the objections I know of tend to come off as very paternalistic. For example, one commenter says, "I don't like the idea of [poor] people feeling obligated to sell their organs." This argument irks me for at least two reasons, but I have to go help my boss with a task right now and I figure I'll forget to post if I save it for later.

Reading

I know, I know. I haven't written much at all of late. Sorry about that. I've been busy and uninspired -- though the two may well be related.

Anyway, ... In my return to blogging, I figured I'd fall back on an old reliable topic: reading! As always, I have more things to read than time to do so. I did finally finish Neal Stephenson's wonderful Baroque Cycle. I know I've praised him before, but I'm in awe of the man. How did he manage to envision, much less write, a series of 3 (approximately) 1000 page novels that managed to be historically informative and entertaining? Yes, they were slow reads at times, but I enjoyed every page. Now I'm all fired up to read more about that period -- basically the scientific revolution of the late-17th and early-18th centuries.

Specifically, I'd like to read more about the dispute between Newton and Leibniz over "the calculus". I get the impression Stephenson is more sympathetic to the latter, but I'd like to read an accessible, objective treatment of the issue. Do any of you have any expertise or suggestions? I realize it's a stretch, but I thought I'd ask.

Now that I've finished the Baroque Cycle, I'm kind of adrift. I have several books piled up that I've been meaning to read, but none of them call to me. Do any of you have a "hot read" you'd like to recommend? I read pretty much any genre -- history, literature, detective stories, science fiction, etc. -- though I will admit that I find most biographies tedious. I just picked up Singularity Sky, a SciFi book that I'd heard good things about. So far it's okay, but I find that a lot science fiction takes too much effort to read. There are too many invented technologies, terms, etc. that just aren't explained. Hence, I have to concentrate very hard to keep everything straight in my mind. This is one of those books. I haven't given up on it though, so I may change my opinion later.

I also just laid hands on Jimi Hendrix Turns Eighty, the latest from Tim Sandlin. As some of you know, Sandlin's debut novel, Sex and Sunsets, is one of my all-time favorite comic novels. I also really liked his GroVont trilogy. Since then, though, I haven't really cared for his books. I found Jimi Hendrix at a cheap book sale, though, and I figured I'd risk $3.99. We'll see.

Okay that's what I'm up to. Any reading suggestions will be most appreciated. I'll try to come up with a more topical post soon.

Outrages

Two things caught my eye in recent days and both have me madder than a wet hen:

First, According to Sports Illustrated, the International Tennis Federation is investigating a claim that Tommy Haas was poisoned before Germany's Davis Cup match against Russia.

Haas was forced out of his match against Mikhail Youzhny with a suspected stomach virus as Russia won both reverse singles matches on Sept. 23 to win the semifinal series 3-2 and reach the Davis Cup final.
[...]
German teammate Alexander Waske said he was told by a Russian who manages numerous athletes that it was poisoning, not a virus. Waske didn't say who the manager was.

I'm not a big conspiracy theory guy and this story is almost too incredible to even consider. Note the almost. Yes it sounds like typical tinfoil hat paranoia, but it does seem that folks who might be considered enemies of Russia do end up poisoned with much more frequency than the population in general. I'm not going to argue that Vlad himself would have ordered such a thing, but I don't think it would strain belief to think a "monkey-see-monkey-do" kind of attitude could have led someone involved with Russian tennis to have slipped Haas a dose of something nasty. I hate that I'd even consider such a thing possible, but unfortunately I do.

Second, our Democratic Congress. Remember these folks? Their entire platform in the mid-term elections boiled down to something like, "We'll get us out of Iraq and we'll stop the hemorrhage of money coming out of D.C." So how have they done? Well I can't see that they've accomplished much on Iraq (for better or worse) and as for the money, ... The Dems, along with willing Repubs, managed to override a Bush veto this week and preserve a water bill chock full of silly, wasteful earmarks. Then there's the latest farm bill! Debra Saunders has a nice take on it. The complaints are familiar, but no less frustrating -- huge payments to wealthy farmers, subsidies at a time when farm incomes are at all time highs, payments to people who have absolutely nothing to do with farming, etc. I know this is business as usual, but didn't the Dems pledge to stop this kind of crap and return fiscal sanity to Washington? My favorite part of Saunders' column:

Speaker Pelosi, a San Francisco Democrat, promises reform in the next Farm Bill. Ha. Methinks that if Democrats can't cut corporate welfare in the very year in which they promised to deliver big reforms, they never will. In five years, Pelosi simply will have honed the bad habits that the powerful develop to strengthen their chokehold on power inside the Beltway.

It's a pessimistic view, but one that I fear will prove true.

Sigh. I promise I'll try to find something cheerful to comment on next time.

Dating advice

Yes you read that title correctly, but no, I'm not actually giving dating advice! Instead I wanted to mention the funny (from an economist's perspective), though probably fraudulent, Craigslist ad from a while ago. If you haven't heard about it, a very hot woman supposedly placed an ad on Craigslist in which she expressed her dismay that she hadn't been able to land a mega-rich sugar daddy. Someone answered her ad and explained that she wasn't really offering a fair trade. I thought it was pretty funny (one of my students brought it to me), but the guys over at the Freakonomics blog give it a much better treatment -- including the full text of the (alleged) ad and reply. Give it a read if you haven't already seen it.

Other than that, not much to offer. I know I haven't been blogging much of late. I have two theories as to why. First, I've just been really, really busy. Second, I haven't thought of anything that I just HAD to share. I think I'm in a rut. Tomorrrow's Friday, so I'll try to come up with something interesting then.

UPDATE: If you're interested in the totally materialistic approach to dating, then this fake ATM receipts site might be of interest to you.

Asking for it

For the most part, I like my adopted home state. Sure there are some things I could live without, but all-in-all it's not a bad place. Most outsiders, though, don't see it that way. In fact, the last 2 states I've lived in (AL and MS) both often are perceived as bastions of backwardness. Most of the time I think this "perception" is mistaken condescension by outsiders, but sometimes we kind of ask for it. For instance, this Halloween wedding. I'm just praying that someone from My Name Is Earl saw this story.

Two Decatur vampires met their brides on Halloween night for a double wedding ceremony featuring glow sticks, a motorcycle-riding Jesus and Freddy Krueger.

Stephanie Lynn Arnold, 22, and her mother, Debbie Lynn Harville, 38, both in costume as vampire brides, married Peter Daniel Brauchle, 26, and William Thomas "Tommy" Curbow, 31, respectively.

Yes you read that right. It was a mama and her daughter in a double wedding with a fog machine, a Freddy Krueger ring bearer, and a black-clad motorcycle Jesus officiating. The crowning touch -- the matriarch walked down the aisle to a Survivor tune! (I'd have bet the ranch on Skynyrd.)

I'm all for free spirits and the general pursuit of happiness, but I guess I have respect for some traditions. I can think of two: Major League Baseball should begin its season with a day game in Cincinnati and weddings should be solemn. Now that I think about it, though, I'm flexible on that wedding thing. I wouldn't do it, but if it made them happy, well good for them. There's no room for discussion on that baseball thing though!