Patents and Prozac
Jan 30, 2007, 1:56p - Business
The core of current economic theory proposes that humans always act in their self-interest, maximizing their "utility function". They will do what brings them the most benefit, be it material, emotional, spiritual, or social in nature. Most capitalists focus almost exclusively on the material benefits, because they're much easier to quantify while the other 3 are more loosy-goosy. But just ... more »
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omar
- Feb 13, 2007, 7:20p
in some ways coke is even worse! coke doesn't have a patent because i'm quite sure you can't patent food recipes. so instead, they have a carefully guarded secret. reverse engineering coke, from what i've read, doesn't really give you what you'd need to actually create coke.
on the other hand, because all the information about prozac is out in the public, even though you can't create prozac without paying eli lilly (at least, until recently) you could look at what they did to innovate, the recipe, etc.. and build on that work. certainly some of that is trade secret, but since so much information about the drug is out in the wild, people can at least use this information and derivative information and innovate, if not use the actual drug itself.
it's not perfect, sure, but on the other hand the potential for increased secrecy if you eliminate IP could grow. i think it's worth examining that angle in more detail.
vivek
- Jul 11, 2007, 9:57a
But when you will take the R&D time period of 10-15 years into account it will all change.
Taking a modest cost of capital of 8% and comparing income with investment (not revenue), you will find that you will have negative return and it does not cover the money invested. Probably you will be better off buying CD's than investing in a risky business such as pharmaceutical drug development.
Just my 2 cents.
nikhil
- Jul 11, 2007, 11:42a
Hey vivek. You bring up a good point, so let's do the math. For simplicity, let's make the following assumptions. These are just estimates that I find potentially reasonable. Changing these assumptions can have a *big* impact on the results, so again I wanted to emphasize that this is all mostly hypothetical.
Some Assumptions:
- Prozac cost $900M to develop, and for simplicity let's assume $100M was spent each year for 9 years (this assumption is based on today's avg drug development cost and period)
- Prozac would have earned $1.44B in profits in the first 4 years on the market (based on no patent protection and net profit margins of 60% on the $2.4B in revenue it earned when it lost it's patent protection - the net profit margin may be a bit high, given marketing and other costs)
Scenario #1 - Conventional investing:
- 8% return (with continuous compounding) on annual investments of $100M for 9 years and compounding for an additional 4 years = $1.89B = (((((((((100 * e^0.08 + 100) * e^0.08 + 100) * e^0.08 + 100) * e^0.08 + 100) * e^0.08 + 100) * e^0.08 + 100) * e^0.08 + 100) * e^0.08 + 100) * e^(0.08*5))
Scenario #2 - Prozac development and sale without patent protection:
- Return of $1.44B on investment of $900M
Conclusion:
$1.89B is more than $1.44B, so you're right, investing at 8% would have yielded a greater return than developing Prozac, given our assumptions. But Prozac still has a decent return, though with a fair bit more risk. I guess my point is that developing Prozac would still yield a profit, and without patent protection it would likely help more people in the long-run (due to greater access, cheaper availability, and development of more derivatives), assuming of course that the incentives are great enough for it to be developed in the first place. A less-than-market return may not be enough of an incentive for some people. Then again, people earn less-than-market returns for a variety of reasons, including social benefit. For example, investing in a microfinance frequently yields only a 3% return, but some people still invest in it. Finally, increasing access by reducing prices may also increase overall revenue, as it may cause greater net consumption. Of course, it's hard to say for sure what would happen without actually trying it. Supply-demand curves are tricky things.
Water Crystals
Jan 27, 2007, 1:17a - Science
Science is the most arrogant and the most humble of suitors. Endowed with the audacity to seek Truth yet the humility to prove only falsity, it seeks knowledge as its ultimate goal. Its right has been handcuffed by its left, and together the pair lurch through the world, disposing of the old and selecting of the new. The trail behind ... more »
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omar
- Jan 27, 2007, 5:52p
those are quite beautiful! but the idea that the stimulus is the key independent variable influencing the look is just ridiculous, and you do a good job hitting all the major points.
nikhil i suggest you do a quick read in research experiment literature so you can get down with the terms and better organize what went wrong with the situations you're going to examine.
i feel like this is an exercise you'd give a class that's learning how to do "respectable" research. find everything that's wrong with this method. it seems you've hit on all the major things. i'll just mention two key evaluation criteria often used to evaluate experiments: internal and external validity.
internal validity means that an experiment strongly supports the conclusion that the independent variable (in this case, what the water is "shown") causes the variation in the dependent variable (namely, the patterns that are formed). you point out that they didn't control for other factors, they didn't do any reasonable statistical analysis to show that this is unlikely to be due to chance... there are a bunch of competing hypotheses to explain these patterns, none of which have to do with the specific stimuli.
external validity is usually concerned with possible generalizations and repeatability. of course, as you point out, this experiment has no external validity.
http://en.wikipedia.org/wiki/Internal_Validity
http://en.wikipedia.org/wiki/External_Validity
Justin
- Feb 10, 2007, 10:02a
Thanks for doing this research. This is disappointing and comforting at the same time.
me
- Jul 18, 2007, 1:53p
Thank you for your information. You saved me lots of money from buying that book though it has much advertising in many bookclubs and stores! You help lots of people who are Not scientifically inclined,and also to broaden their inquisitiveness and learning.
carmen
- Jul 28, 2007, 12:28a
I just read the book and was looking on line to find anything or anyone that could articulate for me what I felt when I finished reading his book. Yes they are beautiful pictures and it is a interesting idea but the science they used, or present, leaves one feeling betrayed. Thank you for your insight!
student
- Sep 10, 2007, 7:41p
i think ALLAH is true and you need to enter ISLAM.if you don't belive it you look the AL QURAN water crystals!!!!!!!!
ace
- Oct 5, 2007, 10:23a
yea i agree people
No Post Today
Jan 25, 2007, 7:01p - Temporary
Apologies for not posting today, as promised.
I'm in the midst of research for the article I wanted to post today, but have realized that it's going to take me more than a day to sort through all of it and cohere my thoughts. The next post will be a (longish) essay on certain phenomenon found outside the mainstream of ... more »
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omar
- Jan 25, 2007, 7:43p
everyone is sick!
Hierarchy and Equality
Jan 23, 2007, 2:54p - Organization
It begins as a child. From the moment of birth, we're told what to do and what not to do. As we age, what our parents and teachers tell us to do diminishes in weight, and we question why we should do as they request. The funny thing is, they usually don't have a very good reason why, and the ... more »
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omar
- Jan 23, 2007, 8:25p
my father would say that we could do whatever we want, but taking his advice would short-circuit our paths and land them at the right place. ie, why go the long way when i can show you the short way?
of course, i always countered that
1) part of the reason we take the "long way" is because of the learning that occurs in the process
and 2) how do you know the proposed landing spot is the right one?
i once wrote a report, way back when, about children's freedoms in the victorian era (at least i think it was that era). anyway, they were shouldered with responsibility and decision-making at a much younger age (though this was likely for more prudent reasons than equality).
i took a class, again way back when (but less when.. er less way) on literary theory, and for a while we read about foucault's characterization of power and knowledge. here's the first link i found on the subject, which might interest you. it's a bit heavy-going, but worth it when you start to understand what he's saying. i need a refresher too, and will read.
http://www.colostate.edu/Depts/Speech/rccs/theory54.htm
joe
- Jan 23, 2007, 8:45p
totally stupid
nikhil
- Jan 23, 2007, 11:57p
joe, care to elaborate?
SB
- Jan 24, 2007, 2:59p
Interesting thoughts.
Inherent need for some degree of hierarchy exists beyond the human race.
Whenever multiple entities *may not be the right term as it primarily refers to living creatures in this context* coexist, even if they start in a horizontal line (at the same level in every sense), after a certain period of time some of them will stand out thus leading to a pyramid like structure.
This comes from an ingrained need to compete, acquire more etc and is one of the cornerstones of our civilized existence.
Lastly, "helping" kids with independent thinking, not give a sense of hierarchy , even if there is one, etc are much talked about parenting challenges.
Harpoon
- Jan 25, 2007, 3:23p
I would like to challenge some of Nikhils assumptions, however i agree for the most part that heirarchy sucks alot.
Firstly, parent-child isn't so much heirarchical as it is "authoritative". Parent-child relationships, are more frequently and ideally "authoritarian" rather than authoritative. However the latter does take place which tends to be disadvantageous to both parent and child, and can be attributed to lapse in parenting skill, capacity to love or care, or impaired mental capacity.
Furthermore, no parent fully dictates every single action and decision for a child, in truth, they only really have the time to prevent the child from doing things which could harm him/her or everyone. Soon a parent begins to realize their role is largely as facilitator, not as decision maker. Facilitating involves helping an unorganized person or group or inexperienced member to handle resources and responsibility, which is a more fair and accurate description of parent-child relationships, which should also be true about the majority of career and political worlds. Anyone / group who behaves as a complete psychopath, usually gets kicked out, or voted off the island. It is often times very difficult to get this information spread wide enough and timely enough in practice. So much to anti-heirarchists dismay, heirarchy is marginally beneficial to all. Also consider, each member of said organization of equality may actually not WANT responsibility over resources, decision making capacity, because it may beyond their unique function or skill to daydream. So hierarchy while it may not be equal or fair, or is in some cases counter productive when lunatics are in control, largely does offer some natural benefit to all.
I think there is some truth to entities organizing themselves heirarchically but as with many natural tendencies in society may be to longer term detriment of civilization, which is an abstract concept not physical. Ownership and allegiances create power struggles, ideals create factions and divide us, cause wars. When tradition is devalued, society declines or becomes despondent and overthrows civilization. The process produces haves vs have-nots every time, at least the illusion it can work is usually to the credit of a smaller percentage of "owners". When groups get fundamental on each other's asses it becomes chaos. Western civilizations mind you never guarantee equality or fairness, instead they promote justice and freedom. Equality is in fact opposed to that, you can't have equality and freedom.
The funny thing is ownership means very little, in society unless it is perceived to be so. So we are free to reject the notion that ownership allows others to rule us. That is, if each of us believes we are truly equal. As an owner, if I think i am "more equal" than you, as long as you know I am wrong about that, then you are doing okay. Given this kind of personal freedom, and the low cost to participate in traditional heirarchy, most are fine with it over anarchy or equiarchy.
Hierarchy almost always has the side-effect - either attracts or produces psychopaths, which happens obviously in government and corporations (not usually in families unless maybe you have 10000 children, or a parent suffering from inferiority complex). Another potential solution to the problem of inequality, might be in independent reporting. If decision makers at each level, were made proactively aware of the potential harm that their decisions make, or, of better ideas that can contribute, then it would correct the tendency for leaders to resort to despotism (if they have a conscience). By proactive I mean this would need to be a stated part of their responsibility, which they get held accountable to perhaps in a democratic way by those lower down in the order. This should in fact be a part of the facilitator role, listening, and when that fails to happen, it is automatic and public demotion followed by humiliation and desecration of their ancestry
Stop Bugging Me
Jan 20, 2007, 11:20a - Democracy
Taking a brief break from the philosophical and moving on to the practical, here's a list of websites you can use to get people to stop bugging you:
- Reduce physical junk mail with the Direct Marketing Association's Mail Preference Service. Takes effect within 3 months and last 5 years.
- Reduce credit card offers with the credit agencies' opt-out tool. Takes ...
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Walls of Wealth
Jan 16, 2007, 10:58a - Culture
Why do we build walls?
As early as the 3rd century BC with the Great Wall of China, wealthy civilizations have made it their business to erect physical barriers for what they saw to be encroachments on their territory. Land is second only to human capital as the greatest source of wealth and power. We see the instinct to ... more »
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Top 11 Books
Jan 10, 2007, 11:52p - Book Notes
A few people have asked me for book recommendations, so here goes (in no particular order):
• The Greening of America - my notes
• Your Money or Your Life - taught me how to know when I had enough money
• A People's History of the United States - must read to get a truer understanding of United States ... more »
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Buzz
- Jan 11, 2007, 9:30a
Eric Drexler, Engines of Creation
Steve
- Jan 18, 2007, 7:32p
Barry Schwartz, The Paradox of Choice
Chris Anderson, The Long Tail
Bong
- Jan 22, 2007, 6:00p
...thanks for the fab reading referrals last week.
charles
- Feb 10, 2007, 4:02a
Do your blog readers want a progress report on the transformation that I called the greening of America? It is happening right now. but under the radar. In 300 words or less. Charles
Book Notes: Notes from the Underground by Fyodor Dostoyevsky
Jan 8, 2007, 11:42a - Book Notes
Here's a collection of quotes from Notes from the Underground, a short 91-page novella. The book is broken into two halves, and I found the first half (a philosophical pondering) much more interesting than the second (a plot involving school-time enemies and a prostitute).
Overall, I highly recommend this book (and you can read it for free online). It ... more »
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Buzz
- Jan 8, 2007, 12:59p
You can read it free online, but the best translation is the one by Richard Pevear and Larissa Volokhonsky
Book Review: The Death and Life of Great American Cities by Jane Jacobs
Jan 5, 2007, 12:34a - Book Notes
The Death and Life of Great American Cities - Jane Jacobs
This book had been on my list of books to read since I started keeping one a few years ago. I'd heard about it in countless places, and after seeing 2 references to it in Adbusters, I figured it was about time I bought it. I got it ... more »
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Buzz
- Jan 5, 2007, 12:49p
From what I hear, Jacobs is practically revered in Canada. My dad owns multiple copies of this book and makes a point of giving one to anyone he comes across who happens to have some sway in LA politics. Hollywood is a good example, for instance, of how not to organize a city.
Neha
- Jan 5, 2007, 5:56p
The first few paragraphs of your analysis are interesting, but after that I decided that I really disagree with Jacobs, particularly her list of forces that cause decline in cities.
She seems very pro status quo, citing "competition driving out older businesses" as a reason -- I see exactly the opposite happening in my area of the east Mission. This is an area in great need of new restaurants, bars, and shops for all the yuppies moving in, but instead we have perpetually empty hair salons and bad shoe repairs shops. I have never understood how these places afford their rent, but its clear to me that driving them out would only benefit the community and their existence only furthers stagnation.
Anyway, your summary was really interesting! My town in Illinois has a requirement that every property be on no less than 5 acres -- we're beyond a suburb of Chicago, I think the term they use now is exurb. I don't know a single neighbor.
Buzz
- Jan 6, 2007, 2:06p
"People were proud of them [civic centers], but the centers were not a success. For one thing, invariably the ordinary city around them ran down instead of being uplifted."
One problem that emerges in the rise of cities is that the financial incentives of concentrating office buildings and commercial centers crowds out residentials. As a result, downtown areas are bustling with commerce during the day and become ghost towns at night when all the middle class businessmen flee the depressed inner city for their homes in the affluent suburbs. Without local residents investing in keeping the city livable, crime and poverty result.
nikhil
- Jan 8, 2007, 9:41a
Neha,
Thanks for leaving a comment :)
A few things:
1) I think I may have miscommunicated Jacobs's intent. She actually is not pro status quo - she is pro gradual change rather than what she calls the "cataclysmic" change that changes too much too quickly and never lets a real community settle in.
2) Regarding "competition driving out older businesses": Jacobs sees competition as generally a good thing, except when it leads to monotony, which she views as the antithesis to diversity. For example, the Promenade in Santa Monica went from nothing in the 80s to being one of the most popular malls in SoCal. It is still a great, diverse place, largely due to the street performers and retail carts. However, it's diversity declined as big-name brands took over as they saw the popularity of the location rise. I'm not sure about the details of acquiring space in the Promenade, other than that it is controlled by the city rather than a private developer, so they may have some restrictions in place to maintain diversity (it's still very diverse).
3) I suspect the lack of change in your area of the Mission is due to rent-control. I view rent-control as a good thing, not only because it prevents gentrification and the associated displacement of poorer people, but because it reduces the speed of change, allowing a community to solidify. To build a new development one needs to wait awhile for the space to open up, which supports the creation of a real community. I disagree with your statement that "driving them [older retailers] out would benefit the community" - it may benefit the yuppie community, but about the older, poorer, more entrenched Hispanic community? Would it benefit them?
Thanks again for the thought-provoking comment.
omar
- Jan 8, 2007, 6:23p
i have a lot of comments but one that just struck me and needed immediate typing:
would mixed-zoning ideas make projects in corporations possibly run more smoothly? think of the random corporation as zoned into legal, corporate, engineering, management, etc etc.. often the communication between groups working on the same project occurs at team meetings or over email. of course, positioning people in the same place is hard if people work on multiple projects, which is often true. but then again i wonder how effective it is for people to be spread across many projects, unless you're higher up in the management chain.
anyway, i feel like having the whole "work community" of a project near each other might measurably improve the project outcomes.
anyway, just an idea, and one i'm sure others have had.
Buzz
- Jan 9, 2007, 1:47p
Another thing to consider, one that is not fully anticipated by Jane Jacobs' important book, is the effect that improved communication technologies will have in bringing people from diverse geographic regions into direct virtual proximity.
Our Culture of Caution
Jan 2, 2007, 3:24a - Culture
Last Saturday, Becca, my mom and I took Zoe on a walk in my parent's neighborhood in Santa Monica. I've always hated walking Zoe on a leash - imagine what it would feel like if your parents walked you on a leash when you were little. It seems like a violation of a primal freedom. Of course, most of the ... more »
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Jon
- Jan 2, 2007, 6:01a
The internet is an interesting place for this culture, as well... In the online world, we are trained to download protective programs, be cautious in our footprint, and be skeptical about what we read/see. Yet trust is what forms the most valuable relationships (like, say, with your social network, news site, or, dare I say, search engine). Does this hamper the internet? Does user caution make it a worse place?
The interesting question, and one that goes back to your point, is how can trust be regained. We seem to have lost it as a society - of our leaders and our peers. So can it be brought back, or are we relegated to protecting perceived weaknesses ad hoc because we have no idea about how to create a real 'safe' and trusting environment.
omar
- Jan 2, 2007, 11:38p
nikhil,
i wonder what you think of soft paternalism.. i'll grab here from the stanford philosophy encyclopedia for the definition:
"Soft paternalism is the view that the only conditions under which state paternalism is justified is when it is necessary to determine whether the person being interfered with is acting voluntarily and knowledgably. To use Mill's famous example of the person about to walk across a damaged bridge, if we could not communicate the danger (he speaks only Japanese) a soft paternalist would justify forcibly preventing him from crossing the bridge in order to determine whether he knows about its condition. If he knows, and wants to, say, commit suicide he must be allowed to proceed. A hard paternalist says that, at least sometimes, it may be permissible to prevent him from crossing the bridge even if he knows of its condition. We are entitled to prevent voluntary suicide."
now, applying such ideas to dogs is a bit tricky, because i think it's pretty clear that a dog doesn't really understand the dangers inherent in being unleashed. in the dog's case, we need to weigh the benefits and disadvantages of being on a leash at all times while out in the world. i think you may be going a bit far by invoking the culture of caution in the dog scenario.
i actually think that considering individual knowledge is key. for instance, in the "riding in the trunk" scenario, i think those kids have a pretty good understanding of the risk, and i think we may be going a bit too far in legislating against it. at the same time, we must acknowledge that since we live in a society where people are necessarily connected to other people, i think it's the duty of the government to weigh the effects of our actions on others, and i think this duty goes beyond the minimal state that guarantees that you won't be attacked by thugs, which is what is advocated by classical libertarians.
finally, i think we need to measure what's at stake. in many of the examples you've given above, what's at stake is no less than someone's life. that seems like high stakes, and often that's where government should be involved.
btw i think you're throwing around "culture" a bit too much.
nikhil
- Jan 4, 2007, 4:47p
the concepts of soft and hard paternalism are interesting. thanks for sharing.
i guess my concern is that almost any action (or lack of action) can be put in terms where someone's life will be at stake. the probability of something bad happening is always non-zero, no matter where you are or what precautions you may take. so the bottom line seems to be what the threshold level should be, in other words, when should the government intervene in some way. For example, if 25% of people who smoke get lung cancer and die 10 years earlier than they otherwise would have, does the government have the right to illegalize cigarettes? What if the percentage was 1%, or 50%? What if they don't die, but those around them increase their risks of lung cancer by 1%?
i guess i'm more of a soft paternalist - if an individual understand the risks that they are taking, let them take it, esp. if a negative outcome primarily affects them. in such a world, government would play a greater role in knowledge disbursement rather than endless legislation.
and in the case of Zoe, since she doesn't understand the risks as a dog, i'm assuming responsibility on her behalf. Becca may disagree with my decision, but it's Becca's unwillingness to take what i perceive to be small risks that is the influence of our culture of caution.
and yes, "culture" was generously bandied about :)
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