Megan McArdle:

Last week, I asked Jim Manzi for his thoughts on the Oregon health care experiment. Manzi is a very smart guy who has founded a very successful company that helps other companies do experiments. He is also the author of the terrific Uncontrolled, a book about using randomized controlled trials to improve business, policy, and life in general. Jim was kind enough to send me his very long, very smart, very wonkish thoughts, which you’ll see below. If you have any interest in Oregon, or just want to be smarter about issues in evaluating social science, you should read this all the way through.

Some Observations on the Oregon Health Experiment

As a vocal proponent of using randomized experiments to inform policy debates, I have followed the discussion surrounding the recent Oregon Experiment with great interest. I think the only thing I’ve previously written for publication on the topic of health care finance was a review of the RAND Health Insurance Experiment. This is the only other randomized experiment of which I am aware that tested the impacts of varying levels of generosity of health care coverage on physical health. The RAND experiment concluded that (1) lower levels of coverage “reduced the use of nearly all health services,” but that (2) this reduction in services “had no adverse effect on participants’ health.” As a casual observer of the topic, that struck me as a fairly important result.

The Oregon Experiment has replicated the first part the first part of the RAND result: Providing free health care coverage increased the use of health care services. However, a debate has arisen between Austin Frakt, Kevin Drum, Avik Roy, Megan and others around the second part: Did this increase in use of health care services lead to measurable improvements in physical health?

This debate has been very informative, but here a few key points that I don’t think have been very widely noted:

1. Almost half the people who were offered free health insurance coverage didn’t bother to send back the application to get it.

About 90,000 people applied for the health insurance lottery (though selection was done at the household level). About 35,000 people won the lottery, and thus had the right to submit an application, but only about 60% of these lottery winners actually sent the application back. This ought to tell any common sense person a lot about the revealed preference for how much the uninsured value the coverage on offer.

Gideon Rachman

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As we sip our drinks, there is still time for one last dark warning about the future of Europe. Leaning forward, the president says: “Our generation have lived in such certain times, secure times, that we cannot imagine how it was in the past. But nothing is excluded. Nothing. We have banished the demons of the 20th century but we have not eliminated them: hatred, racism, anti-Semitism, nationalism. Look at what’s happening in Hungary. Young students in Budapest are painting on the door of a professor – ‘Jew’. These are students doing this, not football hooligans. We have the privilege that we have never seen such people in power but there is no guarantee it will not happen. My protection against them is a strong European Union.”

After that, there seems nothing much left to say so I call for the bill. Earlier in the evening, Schulz had said that he must pay, explaining that parliamentarians are not allowed to accept hospitality. I counter-explained that while our guests choose the restaurant, FT journalists are obliged to pay. It is one of those British rules. So, a trifle reluctantly, Schulz lets me settle the bill and heads back to his Strasbourg hotel – and his diary.

The Economist:

CALL it hyperactivity, call it the temptation to fiddle. Chief executives have a tendency to make acquisitions just to show they are doing something. Similarly, fund managers, sitting at their desks all day, have the urge to trade. Otherwise why go into the office at all?

But these trades inevitably incur costs, and not just in the form of fees disclosed to mutual-fund investors as part of a fund’s total expense ratio. When a large fund sells its stake in a small company, for example, the share price may fall significantly as supply overwhelms demand. A recent paper* in the Financial Analysts Journal (FAJ) found these hidden costs were, on average, higher than the funds’ declared expenses and had a significant negative impact on returns.

The academics looked at the record of 1,758 American equity mutual funds between 1995 and 2006. They estimated trading costs by looking at changes in portfolio holdings (which are revealed every quarter), checking the bid-ask spreads for the stocks concerned and making an allowance for the price impact of trades.

Dan McCrum:

The Berkshire Hathaway annual meeting is like Woodstock for capitalists. It draws tens of thousands of shareholders, value investors, groupies and the curious to the midwestern city Omaha, Nebraska.

They make the pilgrimage each spring to sit at the feet of Warren Buffett and Charlie Munger, the two men who have spent half a century building a sprawling $260bn conglomerate.

The FT’s Dan McCrum was there to capture the weekend festivities and the wise words from the pair of octogenarian sages.
3:53pm

I’ve landed in chilly Omaha, a big open city spread along the Nebraska side of the Missouri River, and its starting to fill up with eager investors from around the world. You can spot some of them carrying the 2013 annual report, required reading among the faithful, and by sound of discussion of the great man.

Matthew Goldstein:

Michael Marchillo, a plumber, has been trying and failing for months to buy a bigger home for his family here in Sin City. He was pre-qualified by a bank for a $130,000 mortgage, which a year ago would have landed a typical three-bedroom home in the area. No more. Now, the 36-year-old says, it’s hard to compete with “greedy investors” who come to the table flush with cash for quick deals.

Marchillo is on to something. The once-beleaguered Las Vegas housing market has been on fire since investment firms led by Blackstone Group LP, Colony Capital and American Homes 4 Rent began buying homes here some eight months ago, backed by $8 billion in investor cash to spend nationally.

These big investors and a handful of others have bought at least 55,000 single-family homes across the U.S. in the past year. In the Vegas area alone, they have accounted for at least 10 percent of the homes sold since January 2012, according to a Reuters analysis of housing transactions.

Tom Foremski:

Google’s dirty little secret is that its commercial algorithm is broken and it can’t distinguish between quality content and spam. Which is why it is backing big brands in a big way because that’s the easiest way to sort things out.

That’s too bad for small mom and pop businesses and the backbone of the economy.

Nicholas Retsinas @ HBR:

The United States housing market is no longer the boat anchor dragging down economic growth. Data from the S&P/Case-Shiller Home Price Indices show that average home prices in an assortment of American cities have been on the upswing, increasing by almost 7 percent across the country in 2012. Recent reports that sales of new single-family homes rose in March are proof points that “the housing market recovery remains on track.”

We asked Nicolas P. Retsinas to reflect on the re-emergence of the housing industry, what it means to the rental market, and the future of the mortgage interest tax deduction. Retsinas is a senior lecturer in real estate at Harvard Business School, director emeritus of Harvard University’s Joint Center for Housing Studies, and former Federal Housing Commissioner.

Q: What factors have been contributing to the housing recovery?

Steve Coll:

In the summer of 1960, Sidney Gottlieb, a C.I.A. chemist, flew to Congo with a carry-on bag containing vials of poison and a hypodermic syringe. It was an era of relative subtlety among C.I.A. assassins. The toxins were intended for the food, drink, or toothpaste of Patrice Lumumba, Congo’s Prime Minister, who, in the judgment of the Eisenhower Administration, had gone soft on Communism. Upon his arrival, as Tim Weiner recounts in his history of the C.I.A., Gottlieb handed his kit to Larry Devlin, the senior C.I.A. officer in Léopoldville. Devlin asked who had ordered the hit. “The President,” Gottlieb assured him. In later testimony, Devlin said that he felt ashamed of the command. He buried the poisons in a riverbank, but helped find an indirect way to eliminate Lumumba, by bankrolling and arming political enemies. The following January, Lumumba was executed by the Belgian military.

For Eisenhower, who had witnessed the carnage of the Normandy landings and the Battle of the Bulge, and later claimed to “hate war as only a soldier who has lived it can,” political assassinations represented an alluring alternative to conventional military action. Through the execution or overthrow of undesirable foreign leaders, the thinking went, it might be possible to orchestrate the global struggle against Communism from a distance, and avoid the misery—and the risks of nuclear war—that out-and-out combat would bring. Assassination was seen not only as precise and efficient but also as ultimately humane. Putting such theory into practice was the role of the C.I.A., and the agency’s tally of toppled leftists, nationalists, or otherwise unreliable leaders is well known, from Mohammad Mosadegh, of Iran, in 1953, and Jacobo Árbenz Guzmán, of Guatemala, in 1954, to Ngo Dinh Diem, of South Vietnam, in 1963, and Salvador Allende, of Chile, in 1973. Not all the schemes went according to plan; a few seemed inspired by Wile E. Coyote. The C.I.A. once planned to bump off Fidel Castro by passing him an exploding cigar.