Showing posts with label Affordable Care Act. Show all posts
Showing posts with label Affordable Care Act. Show all posts

Wednesday, June 04, 2014

Risk Takers Are Typically Also More Rational

During the first week of the year 2000, Sam Schmidt, an Indy Car race driver who was favored for the upcoming season, slammed into the wall on turn two during testing at Walt Disney World Speedway, leaving him a quadriplegic.

He fought back, got an MBA, bought his father’s company and with a  partner fielded Schmidt Petersen Motorsports, inspiration enough given the risks of racing.  But a new study shows that race drivers are actually more rational than the general population.

Fourteen years after his accident in the days leading up to last month’s Indianapolis 500, Schmidt drove a souped-up Corvette Stingray for several laps around the historic oval.

Using a semi-autonomous technology so he could handle the car with head movements, he hit 100 m.p.h.  Click here to see how it works.  Essentially he bites down to brake, tilts his head left or right to steer and tilts his head back to accelerate.

The development is part of a US Air Force-funded research project, but a new study shows that even amateur race car drivers are actually much “more rational” about choices than the average population.

Like motorcycle riders now who, on average, are in their 40s compared to the average of 24 during in the 1980s, the researchers found it isn’t risk they are immune from.  They are just better immune to “possibility bias.”

This is the overweighting of low probabilities that keep people from trying new things.

Instead they are less likely to overemphasize low-probability events including failure.

The latter fall on the risk-adverse “small-t” part of the T-Personality Spectrum refined by Temple professor and researcher Dr. Frank Farley over the last three decades.

Those who are immune to “possibility bias” are the “Big-T” or “T-Positive” personalities who take risks because they are motivated by intensity and innovation.

According to Farley, these “Big-T” personalities just have a much higher tolerance for uncertainty.  As nation’s go, over its history the USA has been a “Big-T” country according to Farley.

Over the course of its history, Durham, North Carolina has always been a “Big-T” community as are others who focus on being distinct.  “Big-T” is also why Durham’s destination marketing is more innovative than others.

While those who aspire to be “major league” by merely emulating others at the sacrifice of sense of place are probably “small-t” cities.

Farley also classifies gamblers and criminals as “T-Negative” personalities, a group that includes far too many business executives and government officials involved in “legal corruption” too.

When you take lessons to ride a motorcycle, you learn to sense your limitations, ride as though everyone is out to get you and always be alert to escape routes should a problem arise.

In general, motorcycle riders are expert at rationally calculating risk.

You also learn that the death rate for motorcyclists is 30 times higher than it is for drivers of motor vehicles overall, but that this rate falls dramatically depending on type of bike, e.g. sport bikes vs. cruisers like Harleys, and by speed and the age of rider.

I always wear a full-face, modular helmet because injuries occur more often to the jaw than the top of the head.  But ironically, 75% of the fatalities on sport bikes involved riders who also wore helmets of some type.

Interestingly, only half of those riding cruisers or standard motorcycles were wearing helmets when fatalities occurred, another reason perhaps that different types of bikes need to be differentiated for premiums.

But you don’t wear a helmet so you can take risks, you wear it because others who are less rational in vehicles of all type take them irrationally.  That may be why many race drivers feel safest while on the track.

Controlling speed, avoiding alcohol, staying alert and the wisdom of age bring the accident rate for riders down to near that of cars.  Overall, the fatality rate and crash injury rate for 100 million motorcycle miles traveled is 24.93 and 440 respectively.

The latter figure has fallen nearly 60% just since 1989 when I was just more than a third of the way through my now concluded career.

The biggest danger to riders is the same one it is for all vehicles: drivers of cars, trucks and SUVs who don’t pay attention.   And as we know from this assessment of what happened recently on Mt. Rainier, stuff happens no matter what you do to mitigate it.

Motor vehicle drivers are more likely than motorcyclists in my opinion to underestimate risk.  A new study by the National Highway Safety Administration computes that motor vehicle crashes costs society $871 billion annually, nearly $900 for each person living in the United States.

Nearly 70% of that comes from the lost of life as well as pain and decreased quality of life due to injuries. 

Nearly 75% of these costs are shouldered by non-participants through taxes, insurance premiums and congestion-related losses. Funny we don’t hear Tea Partiers whining about this!

The cost to society vs. the individual total $200 billion alone including nearly a fifth for direct medical care, another reason the new federal healthcare insurance requirement makes sense.

Here’s a thought for those obsessed with repealing this requirement: It may be your right to bang yourself up in a vehicle accident, but I shouldn’t later have to pay for it with my taxes or through other means.

Ride or drive stupid if you want, but insurance should be the minimum requirement.

The direct cost of a motorcycle fatality where failure to wear a helmet is involved is nearly $1.3 million alone.

But the direct economic cost to society for not wearing a seat belt is 11 times higher.

This failure results in killing 3,350 people and seriously injuring another 54,300 each year, costing society $13.billion alone, while using them prevented 12,500 fatalities and 308,000 serious injuries.

Using seat belts, which at one time was vigorously opposed by conservatives, saves society $69 billion in medical care, lost productivity, and other injury-related costs.

Two other new studies are disturbing.

One by University of Michigan researchers found that children of minority parents were far less likely to be given age-appropriate restraint while riding in a vehicle compared to the the children of white parents.

Other studies have often found that parents who are minorities, based on their own experiences, often try to counterbalance what they expect their children are going to face in society by being overly flexible, but this is one area where the requirement is a matter of life and death.

Motor vehicles are the leading cause of death and injury for children.

The other study, by the Oregon Transportation Research and Education Consortium (OTREC,) finds something even more disturbing.  An ongoing pilot study finds that pedestrians who are black are passed by twice as many cars before someone yields at an un-signalized marked crosswalk.

Black pedestrians were made to wait 32% longer than white pedestrians.  Subtle forms of racism surface when information and decisions must be processed very quickly.  This may also lead black pedestrians to take more risk in crossing.

Another new study by researchers at the University of Texas and UCLA finds that “executive functions,” the set of skills so essential to success in life and should be taught and learned at a very young age, also play a major role in our assessment of risk.

These include attention (shedding distractions,) working memory and self control, especially the latter.  Too little perhaps and we underestimate risk, too much and we overestimate the possibility or risk, resulting in “possibility bias.”

Both are harmful, one leads to truly dangerous choices, the other to a life not led.

Monday, October 21, 2013

The $7 Billion Cheeseburger

Nearly two-thirds (63%) of spending on public benefits goes to working families, according to a study released last week by researchers at the University of California and the University of Illinois.  These families make up 73% of enrollments in these safety net programs.

Working families are defined as those where at least one member is working.  While probably unintended, low wage industries are shoving costs off on to government, which is one of the rationales behind passage of the Affordable Care Act.

A high proportion of these low wage workers - a whopping 87% - do not receive health benefits.

In the case of fast food giants, more than half of their front-line workers, including the 28% fortunate enough to get 40 hours of work a week, are enrolled in one or more public assistance programs.

This is twice as much compared to 1-in-4 Americans nationwide.

This amounts to a $7 billion taxpayer subsidy each year for fast food businesses alone.  The proportion of Americans in low wage jobs has ballooned to 4-in-10 nationwide, according to another study.

Yet another recent study of U.S. food policy shows that “…huge subsidies are lavished on crops that become the ingredients for highly processed foods — including “junk” foods,” and other high margin staples in the fast food business model.

The result is a significant part of the $11 trillion diet-related heath issues and lost productivity is pushed off on taxpayers and higher premiums for those lucky enough to have health insurance.

Another report finds that the agriculture subsidy per taxpayer supports just over half an apple compared to 20 Twinkies, a junk food favorite where 17 of the 37 ingredients are taxpayer subsidized elements directly related to obesity, which burdens the economy with $150 billion in hidden costs annually.

Fast food giants and suppliers also make up 1-in-4 of the top 100 businesses keeping outdoor billboards on life support ever since use by tobacco companies were outlawed.

There is now an established link between prevalence of outdoor billboards and obesity.  And billboards themselves require the sacrifice of trees and vegetation, robbing taxpayers of not only these publicly owned assets but their public health benefits, such as screening noise and particulates as well as purifying air and storm run off of pollutants.

All of this amounts to a public subsidy of an unsustainable business model that relies on subsidized ingredients paying workers as little as possible while letting taxpayers pick up the costs.

Recently, it was estimated that for fast food companies to pay a livable wage it would require adding only 68 cents to a popular hamburger, but economists countered that to please investors, the companies would most likely just trim labor costs.

The not so veiled threat is that if required to do the right thing, they would hire fewer people, cut hours and push even more costs off onto the general public and taxpayers.  It is not unlike the hubristic mentality that just ripped $24 billion out of the economy in 16 days.

This is the same threat some of these businesses make about the Affordable Care Act and the requirement for health insurance to lower the burden on taxpayers.

I’ve personally sat on legislative committees for two state restaurant associations.  I’ve learned that there are many good people who want to do the right thing in these types of businesses but they are shouted down by small cadres of condescending extremists all too aware that they can’t go it alone or less honorable competitors would cut them to pieces.

So this is where the free market breaks down because it rarely requires full-cost accounting.  The minimum wage today is much lower than in 1955 when adjusted for inflation.  We’re paying for the cost of subsidized burgers and fries whether we like it or not, whether we realize it or not.

The low wage, taxpayer subsidy is not unique to fast food businesses, that’s just where I have the most familiarity having worked for forty years in visitor centric cultural and economic development.

Similarly, a report updated last spring found that in another segment of the tourism sector, a typical 300-employee Wal-Mart Superstore shifts more than $5,815 per employee onto taxpayers each year or a total of between $1 million and $1.7 million in corporate subsidy per store.

The tourism sector cannot make excuses by pointing just to how many employed there are students.  Nearly 7-in-10 frontline fast food workers are not in school and are single or married adults with and without children.  Two-thirds rely on that income as an essential component of family income.

In my opinion this status quo isn’t working.  We need to experiment with things like requiring health insurance and a livable wage rather than pushing costs off on taxpayers where anti-government types want to “drown it in a bathtub” as a way of controlling costs.

The “drowning” metaphor is horrible when people’s lives are at stake. It is also bad for business.  I’d rather start paying the “real” costs of things even if it takes a while to get things right.

If you missed it, the reports cited are linked where noted in the text.

Don’t take my word, click through and read for yourself, maybe while eating at a fast food business.  Look in the faces of the people serving you and ask yourself if you would pay a little extra at the counter so they can make a livable wage.

Reflect on the fact that more than 7-in-10 are women, more than 2-in-5 are minorities.  Only 13% receive health benefits through their employer compared to 59% of workforce as a whole.

You’re paying hidden costs in taxes anyway.  Isn’t it time for the free market to incorporate a triple-line approach to cost-benefit analysis?