Tuesday, May 31, 2011

China, its Drought and Inflation

The China Daily reports on the impact of the drought in China.

Shoppers at a supermarket in Shanghai's Huangpu district complained that the price of rice produced in Hubei increased 20 percent in one month to 2.6 yuan a kg. Lotus root produced in Hunan also climbed 20 percent during the same period to 4.2 yuan a kg.

In Wuhan, capital of drought-hit Hubei, the average price of 20 monitored vegetables climbed 7.3 percent in one month. The price of cabbage almost doubled in May to 2.22 yuan a kg, according to the Ministry of Agriculture.

This may have a substantial impact on US inflation as well. Demand for Agricultural product up and  price on manufactured products up as well. 

Fifty years ago we were isolated from much of this and now it is as if it is all one country.

The article continues:

If food prices continue to soar during the summer, the increase may exceed 20 percent, which will push up inflation in the short term, Liu Ligang, an economist for the Greater China area with the ANZ Bank, said in his column for Financial Times.

On another note, Gao Wenqi, a researcher with the Shanghai Agricultural Technology Extension and Service Center, said the drought has provided better conditions for aphids to reproduce.

Aphids can produce a new generation in days with no rain, said Gao.

Things are getting a bit stiff.

Monday, May 30, 2011

Mathematics, Technological Change and Truth

Frances Woolley has written an interesting piece as usual and this time it is regarding the changing understanding and usage of mathematics in students. She states:

Here's my theory: Some students struggle with economics because they do not fully understand the mathematical tools economists use. Profs do not know how their students were taught mathematics, what their students know, what their students don't know - and have no idea how to help their students bridge those gaps.

The arithmetic gap is the most obvious one: profs over a certain age (and some immigrant profs) were drilled in mental math; Canadian students under a certain age haven't been. Some implications of the arithmetic gap are familiar: profs who can't understand why students insist on using calculators; students who can't understand why their profs are so unreasonable.

I believe it is even worse than that. Estimating was once the art which followed measuring. You went out and measured again and again until you had the understanding of what distance was and then you could look at say a tree, a lot, or almost anything and estimate. You could look at a jar of jelly beans and estimate to within a good margin of error what was in there. So if you are being attacked by a giant dinosaur you were able to determine rather quickly how far to hurl the bolder to scare the fellow away. Not so in today’s grammar schools.

Technology has entered. Frances uses the map example and she states:

Other technologies also create generation gaps. Today's undergrads have been carrying a cell-phone since their early teens, if not earlier. They rarely wear watches. Some will struggle to read an analogue clock - even if there's a clock on the wall in the exam room, they might not know how much time they have left to write the exam. The disappearance of analogue clocks, however, means that profs risk confusing students when they use clock-based language: "Rotate counter-clockwise." "Turn clockwise." "At 2 o'clock" (as in, 60 degrees to your right).

Maps are another rapidly changing technology. Google maps was launched in 2005, in other words, when an undergraduate entering university this Fall was 11 or 12 years old. She has always been able to navigate by reading a list of instructions from google maps, she might never have had to locate two points on a map and plan a route from one to the other. Yet maps imbed spatial concepts very similar to those used in economics. An indifference curve or iso-profit line is, conceptually, similar to a contour line on a topographical map. What forms of understanding do students lose -and what do they gain - when they rely on google maps rather than map-reading?

This goes to the classic McLuhan statement that as media changes what we perceive as knowledge, read truth, change to resonate with the new knowledge.

Take maps. I started companies in twenty countries and in each case I did three things first. I learned 100 words, such as please, thank you, where is the bath room, here and there. Second, I read a history of the country, so for example in Prague I knew all about the Thirty Years War. In Greece, well, you had a lot. In Korea, you better know about Japan and China. Third, I got maps, I would look at them again and again, it was the culture, it was the history, it was the present. I now use Google Maps but I always change the route, and have second exists. I also from time to time use my Garmin, but alas, if you were born and raised in New York, you never follow Garmin! It must have been programmed by someone in Duluth! They always send you on the Cross Bronx Expressway, the parking lot of the city. Culture counts.

Take watches, yes, most use the cell phone, but even there I have a pocket watch, yes a pocket watch, from an old Russian friend. It stops the conversation every time. But a watch is more than a time teller, it is as Frances says an artifact of saying lots of things, like clockwise and counter clock wise.

The technology is change what we know as knowledge, it is splitting a generation.

But I take her a step further. In mathematics some fifty years ago before computers we had to solve problems by approximation. We had to have a gestalt about the equation, its movement as we changed variables. We understood the equation as a living thing. We looked at boundary conditions and extrema to see if they made sense. The classic example here is Richard Feynman. Feynman had this art down pat, he could feel the answers. He could see a problem and intuit the answer, and then fill in the details. He lived in the equations as a particle, moving and rotating. His approach led to his work on quantum electrodynamics and his symbolic math which got him the Noble Prize. Very few students can even near that now, they all use MatLab and they have totally lost a feel, the no longer go down the alleys of mistakes that lead to enlightenment. Pity. The technology has removed the opportunity of discovery by mistake.

Since getting beck peripherally into academe, at MIT, I have been spending time trying to model cell genetic pathways and cancer dynamics. Not that it will solve world hunger but it is an interesting problem which may or may not be solved by such models. The more I work, the less I know, and the harder it gets. It is akin to economics, just when you think you know something you discover a new path that someone has discovered which changes your model.

For the folks in the cancer modeling area, they understand and await the next change, the stem cell, the micro RNAs, the epigenetic factors, and try again. They are always change models to match the flow of new facts.

Economics is NOT that way however. They add new theories to explain what the result should be and the facts be damned. The Phillips curve and CAPM is an example. So why are economists so different, is it their love of the math qua math, and has the technologies changed any of that. Is there an economist like Feynman who can intuit the right answer and everyone agrees. It is not Krugman, that is for sure. Does the technology make any difference for economics. It has for genetic pathway research, both in generating data and in modifying models. 

Economics however is so much of an understanding of the human condition, and more importantly of humans with dramatically differing world views. The homogeneous assumptions of markets often fail to incorporate that factor. It also fails to incorporate the fact that humans change, in random and intermittent ways. Perhaps economics shall never adapt to that. Perhaps the goal of Isaac Asimov and his psychohistory world view, as beloved by Krugman, will not be achieved.

Finally, even Mark Thoma and the followers there  seem to have resonated with the post by Frances. My comments still stand as one who uses mathematics to solve real problems, fundamentally as an engineer. It is a tool, a tool to understand reality, to project forward and to live with reality. The tool just for the sake of the tool, or the tool used according to the old dictum, "if elephants had wings..." world, has much lesser value. When employing mathematics it is done to seek truth, employ facts, and predict outcomes. It is not to see what the proverbial elephant looks like.

The Change in Physicians

The NY Times recounts the change of physician's political views in Maine as more and more practice at what could be called "jobs" and no longer as sole practitioners. The new physician is driven by getting better hours, lower stress, benefits, no overhead, and just a job. This in many ways is being accelerated by the mass infusion of women into medicine, where the balance is tipped to more than 50% women now entering the field.

It has been changing from a profession to a job. We saw that almost a century ago in engineering where companies brought the profession in-house and then fifty years ago as teachers became employees and no longer professionals as unions took over. Now the trend to employee status is taking over the field of medicine. Soon the MD will be akin to the PhD engineer at some corporation, both employees, cogs in the wheels of a changed society.

Yet the engineers still spin out as entrepreneurs, what will be the equivalent for the physician who seeks to retain a profession rather than a job?

For example the article states:

...a 51-year-old orthopedic surgeon... is the kind of doctor who has changed ...She trained at Harvard, but after her first son was born she began rethinking 18-hour workdays. “My husband used to drive my son to the hospital so that I could nurse him,” she said. “I decided that I really wanted to be a good surgeon, but also wanted to raise healthy, well-adjusted kids I would actually see.” So she went to work for a hospital, sees health care as a universal right and believes profit-making businesses should have no role in either insuring people or providing their care. She said she was involved with the Maine Medical Association, for the most part, to increase patients’ access to care. 

 But this also is the ACO model that the new health care plan fosters. So what can we expect? Physicians with jobs all belonging to unions, and dominated by women who want to work no more than 40 hours per week. Ah, we have seen that tale already, the Public School system. We know where that goes.

Imagine if lawyers wanted the same. Just 40 hours per week, just a job. They could also all work for the Government and when we need one they get assigned by that good old GS5 in the belly of the beast. Just imaging where Madoff or DSK would be now?

As the article continues:

Even in Texas, where three-quarters of doctors said last year that they opposed the new health law, doctors who did not have their own practices were twice as likely as those who owned a practice to support the overhaul, as were female doctors. 

 Frankly why did they enter medicine in the first place. Just to get a job? If we think things are bad now just wait!

Memorial Day 2011

To all the men and women who have been in the wars for this country and its freedom. Happy Memorial Day and be safe.

Saturday, May 28, 2011

Graduation Speakers

This is the season of graduation speeches. I do not remember mine, and I went to a few. However I do remember that whatever they said was both useless and a waste of time. Graduation has different meanings to different people. For many it is just another occasion for acting out their childhood fantasy of wearing little or nothing, shaming their parents, or demonstrating their sense of individuality as a group, somewhat a conflict of terms to say the least. But the speaker is chosen by some "select" and "august" body to reflect the class and as usual in academic circles they generally are well of the mark.

The poor parents who often have contributed substantially are forced to sit through some useless pontification of some self absorbed speaker who knows less than their children who may now possess a college degree but themselves may be less than functional in society. If perhaps they had just learned how to be a good electrician then perhaps they could contribute, but fine arts just does not have a great calling.

Now to the value of this education. There has been more recent talk about the bubble of higher education, the fact that a $250,000 bill for a degree in anthropology may have little merit, then add an MBA from some second rank school say like Dartmouth and what you have is an unemployed disenchanted and generally still uneducated and nonproductive member of society. Better be a carpenter! There is a demand for good carpenters. Investment bankers use them all the time to upgrade their mansions and unbeknownst to the bankers they get paid well.

So in this season of Graduation speakers who bring nothing to the table and to students with degrees that have no value and to Universities who charge more for a degree than a home in the Hamptons, I can only say that the Chinese now produce more engineers that the US and Europe combined. And an IIT grad still outdoes almost all US grads! And none of them have the mill stone or graduation speakers!

Thursday, May 26, 2011

Medicare, Bayes, and Reducing Costs

The mathematician Bayes conceived of a probabilistic methodology which conditions probabilities on what is know about the even before determining its eventual outcome. Consider prostate cancer. If your father died of an aggressive form of prostate cancer then if you have an elevated PSA there is a good chance that you too may have such a form. Not a sure thing mind you but a higher chance than say someone who had no family history but an elevated PSA. That is Bayes in action. Just look at my book on prostate cancer for some info.

Now what  does this have to do with Medicare. Well today in the NY Times some cardiologist published a piece stating that there are excess tests. Yes indeed there are, but, there is Monsieur Bayes. Sorry Doctor, but Monsieur Bayes must be paid attention to.

For example the good Doctor states:

The task force recommends against screening for prostate cancer in men 75 and older, and screening for cervical cancer in women 65 and older who have had a previous normal Pap smear, but Medicare spent more than $50 million in 2008 on such screenings, as well as additional money on unnecessary procedures that often follow. 

 Yes, much of this may be not worthwhile but some saves lives. Bayes helps. How? Family history and very soon genetic testing of the type we have been discussing here. So what does one do? Simple, if Bayes says you are at high risk you get paid fully, if Bayes says you are at lower risk the payment is ramped down. Simply we use the risk to adjust the payment, we use information to make decisions, information which is patient specific.

He continues and states:

Medicare pays for routine screening colonoscopies in patients over 75 even though the United States Preventive Services Task Force, an independent panel of experts financed by the Department of Health and Human Services, advises against them (and against any colonoscopies for patients over 85), because it takes at least eight years to realize any benefits from the procedure. Moreover, colonoscopies carry risks of serious complications (like perforations) and often lead to further unnecessary procedures (like biopsies). In 2009, Medicare paid doctors more than $100 million for nearly 550,000 screening colonoscopies; around 40 percent were for patients over 75. 

 We use Bayes again. If a patient has a family history, first degree relative with colon cancer and a previous colonoscopy had an adenoma before say 65, then we continue every five to seven years. We can remove a recurring or new adenoms simply, save a life, and reduce costs. Death from colon cancer is not fun, I have seen it a few times so trust me, heart attacks are simple.

He continues:

The full extent of Medicare payments for procedures with no known benefit needs to be quantified. But the estimates are substantial. The chief actuary for Medicare estimates that 15 percent to 30 percent of health care expenditures are wasteful. Medicare spending exceeded $500 billion in 2010, suggesting that $75 billion to $150 billion could be cut without reducing needed services. 

 Yes we agree and this is exactly what we demonstrated in 2009 in my book of health care policy! So my suggestion is to follow Bayes. You do for those at risk, allow the others to have access but at a lower rate of funding. Never deny someone just put a rational price on it. Also the genetic tests evolving will give much better Bayes tests.

He ends with:

Changing the system would be relatively easy administratively, but would require a firm commitment to determining whether tests and procedures truly benefit patients before performing them. Unfortunately, in a political environment in which doctors providing end-of-life counseling are called death panels, and in which powerful constituencies seek to preserve an ever-increasing array of procedures and device sales, this solution remains hidden in plain view. 

Of course, doctors, with the consent of their patients, should be free to provide whatever care they agree is appropriate. But when the procedure arising from that judgment, however well intentioned, is not supported by evidence, the nation’s taxpayers should have no obligation to pay for it. 

The last sentence is spot on. Never deny just price accordingly. But pricing should be based on all the evidence, and some due process should be allowed, and more importantly the Government should never, I repeat never, be the collector or arbiter. I fear what would happen with that GS5 with an attitude. The Motor Vehicle Office and IRS are more kindly to a person!

Thus the recommendation, use Bayes, allow the data and testing to change. Then we will see two things, costs will go down and people will be better informed. So will physicians.

Wednesday, May 25, 2011

The ACO Model

In a recent NEJM post they discuss the ACO model. They state:

The ACO model is a reaction to the failure of both fee-for-service payment, which offers incentives to provide excessive services but not to devote resources to managing chronic disease or coordinating care, and capitated payment, which offers providers incentives to stint on care and take on more financial risk than many can handle. The ACO concept represents an attempt to control costs and improve the quality of care in ways that are more acceptable to patients and physicians than those associated with capitation. Built on a fee-for-service chassis, but with unrestricted patient choice, safeguards to prevent stinting on needed care, and quality standards, the Medicare Shared Savings Program attempts to avoid the pitfalls of capitation but still offer ACOs a financial upside if they reduce costs relative to a benchmark and report strong results on quality metrics.

The problem they are solving is the excess costs associated with the wandering patient who in the fee for service world goes from internist to cardiologist to nephrologiist etc. The typical example if the obese Type 2 Diabetes patient who if weight controlled would not have been a problem. But ACOs are thew darlings of the hospitals who see them as sources of more revenue. Take Partners Health in Massachusetts, it is the ultimate in an ACO. However it tends to put the old physician model out of business. 

The article lays out some concerns:

One of the more controversial aspects of CMS’s proposed rule is its method of attributing beneficiaries to ACOs. In an effort to promote more organized care delivery without interfering with beneficiaries’ choices of providers, CMS opted for retrospective attribution...

Also controversial is the proposed system for sharing savings. Basing benchmarks on historical per-beneficiary costs means that ACOs that are already efficient will have to work harder to become more efficient.

The above chart however shows that the pressure is on since Medicare is due to run out of money. There are many problems with this approach:

1. If we increase Medicare from 3% to 4% the problem disappears for an additional twenty years. We have demonstrated that befoe.

2. The chart also assume that medicine never changes. No new procedures or medicines. That is clearly false. It is difficult to determine what will change but it would be at least worth the try.

The article concludes:

The other side of the coin, however, is a real risk that the bar is set so high that too few ACOs will apply. Noting the substantial investments required for ACOs to improve care delivery, some have concluded that the prospects for earning an acceptable return on investment are small and that CMS may have been too ambitious in trying to generate large savings in what is, in essence, a voluntary demonstration

This is the Berwick problem. Having an academic make these proposals, especially one with such close ties with Partners is at least problematic. ACOs are akin to HMOs, just of a different cloth. One suspects they will grow than the backlash will destroy them. The pain in between will be real.

Housing Starts

These are the stats on housing starts. In many ways this reflects the problem in several ways. First there is a dramatic reduction of employment here. Second there is lower demand, thus lower pricing, thus dramatically reduced value, thus wealth loss, thus the feeling that there will be a poor future.

So much of economics is human perception. One should read Smith and Hume again for in a way they stress the empirical world where reason plays less of a role as compared to perception based on what is presented. Unfortunately economics treats this poorly, for in fact the tools are not there.

Cats and Dogs

Well this settles the problem, cats and dogs drink the same.

Science is wonderful and in LeMonde there is an article stating that cats and dogs drink the same:

On pensait que chats et chiens étaient différents. Ce n'est pas si vrai. Les premiers ronronnent quand les autres jappent, certes. Mais quand il s'agit de se désaltérer, chiens et chats font pareil. Et d'une manière plutôt évoluée : ils se débrouillent pour faire fi de la gravité afin de faire remonter le liquide du récipient jusqu'à leur œsophage.

La physique du chat qui boit. L'an dernier paraissait dans la revue Science une étude poussée sur la façon – bien particulière, croyait-on – qu'ont les chats de laper.

 Just to lighten up your day, the French really think about the most interesting things.

Google and Electronic Payments

The NY Times states that Google is expected to introduce an electronic payment system obviating the need for a credit card. This is a major game changer.This moves the one trick pony to full circus status.

1. Search is well done and a winner via advertising.

2. Android, the embodiment of the G phone, was also well executed thanks in part to Apple who closed their system.

3. If this works watch the credit card companies take a head dive. The real question is where is American Express, the initial entrepreneur into card services. If this works it may very well be a big hit on American Express, the ever decreasing player in this market.

I remember in the early 80s when I was at Warner and we deployed the first video on demand system for transactions over cable. The American Express executives kept asking "How do you make money on this?" Perhaps Google will not show them the hard way.

A Community Organizer as Economist

In USA Today some community organizer, one Sally Kohn, has a piece on the debt of the US and why high debt to equity ratios in industry prove that having a high debt is not a problem. She states:

Borrowing today to fund the innovation of tomorrow stimulates our economy and generates revenue growth that pays back the debt. That's why emerging economies such as Singapore — which is still riding high despite the worldwide economic downturn — carry a debt-to-income ratio that looks more like IBM's, borrowing money to keep its economy innovating and growing.

Yes, too much debt can indeed be dangerous, especially debt that is not directed at growing future opportunity and ultimately paying down that debt. But in the midst of a stagnant economy, with the private sector sitting on record amounts of unspent capital and failing to create jobs, government is the spender of last resort — the only way to jump-start the economic engine of our future.

Often, those who oppose federal government spending compare the federal budget to the family budget. Even President Obama has said, "Families are tightening their belts. Their government should, too." Indeed, when families run up credit card debt, though often understandable or even unavoidable, that kind of debt is seen as irresponsible. Think of buying a home. Yet most families grow through strategic debt, including assuming decades-long mortgages. Is such a move irresponsible, or simply a strategic investment in a family's future?

Critics of government often say public institutions should be run more like efficient, profit-driven businesses. In that case, it's time to end the ideological attacks on our federal debt and let our government borrow the same way America's best businesses do. The dividends will come back to all Americans — not just in dollars but also in better schools, better health care and retirement, new roads, safer streets and greater prosperity for all.

 Now I though economists were bad but this takes it to another level.

First, companies had debt to generate wealth. If they don't do so and return the money, unless you are GM with unions, you go out of business. A dollar of corporate debt generates $x of new wealth. Now show me what $x of DoE debt generates, just look at Romer and her plan, no way!

Second, families do not get wealth with debt. Did the lady happen to miss the last few years. In fact they piled on debt and well we all know the result.

Third: Yes, if you want the Government to borrow as a business, show me your plan and accept the consequences when you fail. You're fired!

Fourth, the Government does not generate wealth! The entrepreneur does that. True fact dear community organizer! Just look at DoE, 40+ years of hundreds of billions on electric cars, no result. Would we ever allow that in the real world? No way.
Fifth some facts. Caterpillar has annualized $52 billion in revenue, and $20 billion in long term debt. Now this financial whiz states:

The United States generates approximately $14.5 trillion in GDP each year and carries, currently, $14.3 trillion in debt. That represents a debt-to-income ratio of roughly 1-to-1.

 This is even more than a mixed metaphor. She is mixing income, profit, GDP, and she is all over the place comparing apples to oranges. She seems to argue that all the money we manege to spend or invest is more than enough to cover our debt! She clearly fails to understand cash flow, economic growth and the like. This is what we face going forward, this is what a community organizer sees in their reality, no wonder we have problems. 

Perhaps we should have a candy store own run for President!

Lifeguards, California and the Economy

Yes this is me in 1962 on Staten Island as a lifeguard. We were paid, I believe, $56 per week. Now to California.

The Orange County paper states:

According to a city report on lifeguard pay for the calendar year 2010, of the 14 full-time lifeguards, 13 collected more than $120,000 in total compensation; one lifeguard collected $98,160.65. More than half the lifeguards collected more than $150,000 for 2010 with the two highest-paid collecting $211,451 and $203,481 in total compensation respectively. Even excluding benefits like health care and pension, more than half the lifeguards receive a total salary, including overtime pay, exceeding $100,000. And they also receive an annual allowance of $400 for “Sun Protection.” Many work four days a week, 10 hours a day.

Somehow this has gotten a bit out of whack. In my day we worked Coney Island and Staten Island, had anywhere between 500,000 and a million people per day per weekend and several saves per day. The thought that we would be paid more than a Police Captain was insane.  This is why California has so many problems. Thanks to Greg Mankiw for the lead.

Medicare. Social Security and the Facts!

The WSJ has an article by Cogan which states:

According to my calculations based on government data, such married couples will begin receiving monthly Social Security checks that will, on average, total about $550,000 after inflation. They will receive health-care services paid for by Medicare that, on average, will total another $450,000 after inflation. The benefactors will be a generation of younger workers who are trying to support themselves and their families while paying taxes to finance the rest of government spending. 

 Let us deal with the facts, the basis of the facts and then deal with Cogan who somehow has distorted the facts!

1. First go to the CMS data site, that is where the data is Mr Cogan, so let's deal with the facts. We do not want to deal with your calculation we want to deal with the facts. The total Medicare expenditures in 2009 were $502 billion. Now people paid into that fund and if we look at the actuary reports, say for 2009, we find on p 194 the fact that per beneficiary in 2009 we have the annual costs per beneficiary as:

Part A: $5,319

Part B: $4,686

Part D $1,885

Total $11,890

Now not everyone gets Part D and many do not get Part B. Only Part A is mandatory. Now if we look at their projections we have:

Part A Part B Part D Total
2010 $5,374 $4,569 $1,915 $11,859
2011 $5,577 $4,622 $2,031 $12,230
2012 $5,823 $4,849 $2,139 $12,811
2013 $6,111 $5,053 $2,254 $13,418
2014 $6,483 $5,362 $2,396 $14,240
2015 $6,493 $5,375 $2,573 $14,441
2016 $6,734 $5,716 $2,736 $15,186
2017 $7,003 $6,087 $2,953 $16,042
2018 $7,301 $6,502 $3,177 $16,981

Or a total of $127, 208 for 9 years. The average life from 65 is 77 for a male so if we add that on we get just shy of $150,000. But as we have shown before the average, not the lowest paid, but the average worker contributed in net present value terms at 65 $180,000. In NPV terms at 65 the amount paid is less than $130,000! So where did the money go? And where does Cogan get his numbers! Facts, they are really difficult to face. That is why China, run by engineers, is eating the US lunch run by lawyers and economists!

2. Now for Social Security! Where in God's name does he come up with his logic. Yes SSI payments are close to that but we have been doling out 15% of our gross income for 45+ years! Does that not count?

He concludes:

So today's seniors need to consider how they want the script for "The Millionaire" sequel to be written: There's a knock at the door. We now know that on the other side there's a check for a million dollars. When the door opens, do we really want to see our children, under the commanding gaze of Uncle Sam, presenting us with that check?

 Excuse me Sir, but the money was paid, now time to pay the piper! And he served in the OMB, what a surprise! How about wiping out that Stanford pension, you never really earned it, right. The right and left seem to demonize those over 65. Why, well, the "silent generation", those of us not baby boomers, quietly paid year after year while the folks in Washington "borrowed" the money we paid and now they are screaming that we should not be honored! Why did they not do that to the banks, we paid them trillions, and they screwed up! This is true generational warfare, and no one really suspects that killing off granny will really change anything, just wait till they become granny.

It is a real shame that all of these economists and academics have a total disregard for the truth, the facts shall we say. That is why China is winning! Engineers cannot disregard facts, the bridge will fall. In China if you build a bridge without the facts and it falls, your family pays for the bullet.

Budget Swings

The CBO has issued an update on its projections.

In January 2001, CBO's baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO's forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections.

Worth a read.

Genetic Screening for Prostate Cancer

In a recent British Journal of Cancer article the authors have performed a preliminary analysis of genetic screening of those for higher risk for prostate and breast cancers. We herein look at the prostate cancer issue.

Simply stated the authors have assembled a database of genetic samples and for each have detailed the relative risk and the prevalence. Specifically:

1. They listed SNPs from the dbSNP (“Single Nucleotide Polymorphism database”). A SNP is a DNA sequence variation with a single nucleotide, ATGC, and may be in an exon or intron. Many of these variations occur.

2. The odds ratio, OR, is the odds of an event occurring in one group as compared to another. Thus we can say that if we have two groups, say group 1 which has the SNP alteration, and Group 0 which does not have the alteration, then the odds ratio is given by:


and if the odds ratio is greater than one then we have a greater chance of occurrence. Now consider two SNPs, and their respective individual and total odds ratio. Let p1 be SNP1 and p2 SNP2 and p0 be the lack of SNP1 and p00 the lack of SNP2. Then we have an odds ratio for both occurring, if independent, as:


This assumes independence and shows that the OR do not readily allow direct and simple calculation from each other separately. We of course can extend this principle to n SNPs. It is obvious

3. Using the SNPs as a measure of increased or decreased risk, one can set a risk threshold and test those above and ignore those below.

The result is given by the authors as:

Compared with screening men based on age alone (aged 55–79: 10-year absolute risk >2%), personalized screening of men age 45–79 at the same risk threshold would result in 16% fewer men being eligible for screening at a cost of 3% fewer screen-detectable cases, but with added benefit of detecting additional cases in younger men at high risk. 

Similarly, compared with screening women based on age alone (aged 47–79: 10-year absolute risk >2.5%), personalized screening of women age 35–79 at the same risk threshold would result in 24% fewer women being eligible for screening at a cost of 14% fewer screen-detectable cases.
Personalized screening approach could improve the efficiency of screening programs. This has potential implications on informing public health policy on cancer screening

That is, by performing SNP analysis and ten establishing a threshold one can bifurcate the groups. One could also select groups in some graded multi-sector grouping as well.

The SNPs chose are shown in a modified form below. Many are on the same gene segment. There were a total of 31 SNPs as of the date of the paper where the odds ration exceeded 1.0.

dbSNP No.
 Risk allele frequency
 Odds Ratio per allele
4q24 /TET2
7p15 /JAZF1
10q26 /CTBP2
17q12 /HNF1B

The procedure here is an interesting first step in the genetic testing of potential cancer patients. The process however will most likely require significant refinements. The process however will most likely require significant refinements.

A simple approach to the above is to note that if we rank order the SNPs from highest OR to lowest, and then plot total OR versus N, total SNPs used as ranked, and then also the frequency of the same SNPs as ranked we get an interesting curve. I will leave that thought for the moment.

Thus we can ask the questions as follows:

1. Which SNPs, say the set of some n of them, provides the best set to minimize mortality and minimize the number requiring testing?

2. Can there be some clustering of SNPs such that there are disjoint classes of individuals which get assigned to risk groups. Those in the highest receiving the most significant attention and those in the lowest receiving minimal?

3. Are the SNPs such that they are independent predictors or are there environmental or other exogenous factors which can effect SNPs alone?

4. What is the relationship between SNPs and the pathways known as part of PCa development?

5. Are there temporal changes in SNPs and is there some relationship between these temporal changes? Namely are there causal SNP changes?

6. What are the causes of the SNPs?

7. Knowing the SNPs and those with PCa, what can be determined regarding the dynamics of PCa development?

8. What is the relationship between SNPs and the prostate cancer stem cell? Does the CSC have different expressions?

There are many more questions that arise from this work.