The United States certainly has a reputation for cutting-edge medicine, spending more than any other country on medical R&D and totally dominating biotechnology. By the same token, most analysts agree that if you are rich or well insured, the quality of care is exceptional. By other measures, though, the U.S. system doesn’t shine.

Those who aren’t insured tend to buy relatively little care and are all-too-often very sick when they do seek help. More generally, care outside elite institutions is ragged – a reality that in part explains why the United States is an also-ran by a variety of broad health criteria. For example, infant mortality is three times that of Singapore and twice that of northern Europe. And 48 countries can boast a higher life expectancy at birth.

But there are other factors to consider. Places like Singapore and Sweden aren’t home to many poor people and haven’t been laid low by the obesity epidemic. Thus, comparisons based solely on public health would make us look bad even if medical treatment were better and equally easy to obtain.  So are we doomed to defend the American system with statistics about the number of liver transplants, or to attack it with stats on the lack of pre-natal care?

Not necessarily. In the recent working paper – Mortality Amenable to Health Care in 31 OECD Countries: Estimates and Methodological Issues – a number of researchers are using a new index of quality, (the aforementioned “mortality amenable to health care”) that to us gets to the crux of the matter. And while the index is complicated to calculate, it’s fairly easy to understand. It’s simply the portion of the population (adjusted for age) who die each year from a long list of potentially curable diseases – everything from breast cancer to peptic ulcers.  Thus, for example, in 2007, 79 people out of every 100,000 died unnecessarily in Greece; the comparable number for the Czech Republic was 125.

So, how’s the United States doing? Not so well.

The US placed 24^th (just behind Chile and just ahead of Portugal) among the 31 countries that are members of the OECD. France, the leader by this measure of quality, had a bit more than half as many unnecessary deaths. Wait, there’s more bad news: Between 1997 and 2007, the index for the United States improved by just 1.8 percent – which puts us in a race with Mexico for the least improved among OECD countries. (Ireland won the “most improved” crown, reducing unnecessary mortality by 5.5 percent.)

The US numbers are wretched for a variety of reasons? Hospitals lack adequate error-containment systems; physicians fail at continuing education; patients are rarely badgered to take their pills; and so on. But it’s hard to ignore the fact that, unlike practically all of other OECD countries, a lot of US residents lack insurance. Indeed, it is difficult to imagine a fix that puts us in the same league as northern Europe that didn’t require more Americans to buy (or be given) coverage.

Gerry Faulhaber, Professor Emeritus of Business and Public Policy at the Wharton School, gives it a try. In “Mobile Telephony: Economic and Social Impact,” [Download Here] he argues that cell phones have become the dominant information technology, surpassing even the Internet in importance in daily life. There are 4.1 billion active mobile subscriptions worldwide – an astonishing 61 handsets for every 100 people on the planet.

Arguably the biggest unknown is how the technology is affecting the growth and distribution of global output. And here, Faulhaber is a technological optimist, noting that cell phone networks have sharply improved the efficiency of markets (especially in less developed countries) by increasing the effective size of markets and reducing information and transaction costs. Cell phones now do yeoman duty in isolated towns from India to Brazil, effectively breaking the monopolies of local suppliers and opening urban markets to local producers.

Quantifying the impact on economic growth – aggregating the impact of myriad small changes – is, of course, difficult. One 2005 study (see pages 10-23) by Leonard Waverman, Meloria Meschi, and Melvyn Fuss found that an additional 10 handsets per 100 people in low-income countries raises the pace of GDP growth by half a percentage point annually. In developed countries, where substitutes for hand-held communications are more readily available, adding 10 phones per 1,000 people raises the rate of GDP growth by a quarter of a percentage point. These are humongous numbers when one remembers that a mere 2 percent annual growth rate would increase GDP seven-fold in a century.

It’s a grim world out there in so many ways. But the combination of digital technology and the exponential impact of networks has a way of making optimists of us all.

[Written with a lot of help from Jill Scherer]

Litan scored individual innovations on whether they have: (a) expanded consumers’ access, (b) improved convenience, and (c) increased GDP. And not surprisingly (to us, anyway), he finds that the bag is mixed. While some financial innovations have been unambiguously beneficial to society – think ATMs, debit cards and foreign currency swaps – others have been questionable or even damaging – think collateralized debt obligations (CDOs) and structured investment vehicles (SIVs).

On balance, though, Litan concludes that financial innovation has done a lot more good than harm. Accordingly, there is a real danger that new regulation could prove counterproductive.

No surprise there. But there are some interesting insights to be mined from the data. Household valuations of speed and reliability differ substantially, and are linked to how much time a household has spent online. While the average household is willing to pay $59 per month for basic Internet service, one with less than twelve months of online experience and a slow connection is willing to pay only $31. The willingness-to-pay data thus suggest that training in digital literacy, easy public access to broadband and discounted installation, if accurately targeted, could succeed in getting inexperienced users to take the plunge.

Interesting policy question: If they are right, and if there are positive social externalities in extending broadband penetration, would it make sense to lure new users with temporary subsidies?

Using data from thousands of auto injuries between 1987 and 2002, the two economists estimated that a 10 percent increase in state court budgets leads to a 3 percent increase in the probability that a lawsuit will be filed in any given case. And that potential increase represents a lot of time and money: If all tort claimants behave like parties to auto injury cases, a 10 percent increase in outlays for courts means 60,000 more lawsuits annually. Note, moreover, that easier access to court tilts settlements a bit in favor of plaintiffs. Heaton and Helland estimate that a 10 percent increase in court budgets would raise total settlements by $1 billion annually in auto injury cases alone.

Are more suits good or bad? We’re inclined toward the latter view: Litigation seems to be the last thing America needs more of. But it is very hard to say for sure because every extra case that is filed generates unknown benefits (as a deterrent to injury) along with too-well-known costs.

That’s the message from Robert Hahn (yes, regulation2point0’s Hahn) and Hal Singer (Navigant Consulting) in the latest issue of the Milken Institute Review (yes, the quarterly journal of economic policy edited by Passell). [Download Here] Competition in smartphones – and other markets in which innovation trumps efforts to create monopoly power – thrives on exclusive marketing agreements, which facilitate close cooperation in technological development and allows the innovators to reap the full rewards from their investments.

“While regulators look askance at virtually any vertical restraint that leaves rivals out in the cold,” Hahn and Singer argue, “the burden of proof should rest with those who claim that consumers (as well as rivals) will be harmed. It is very hard to predict the impact of changing technology or consumer taste, especially in markets in which innovation has a way of redefining the product. And in a world in which economic growth so depends on innovation, the stakes are just too high for regulators to guess.”

Nothing so dramatic happened in the wake of the 2008 financial meltdown. So, we must have learned our lesson with respect to trade, right? Yes and no.

Yes, the protectionist response this time around was weak tea compared to 1930. But there is no question that barriers to trade (mostly non-tariff barriers) were raised significantly in response to lobbying by protectionist lobbies in virtually all the world’s trade powers. Equally troubling, there has been little success in reversing the trend even though the global economy has plainly begun to recover. Indeed, judging by the record of the second half of 2009, the inertia driving protectionism remains quite formidable.

How do we know all this? We follow the Global Trade Alert (GTA) reports issued by the Center for Economic and Policy Research, the London-based think tank, and edited by Simon Evenett of the University of St. Gallen in Switzerland. The third GTA report, issued in December, offers a country-by-country compilation of protectionist initiatives along with assessments of the consequences for trade policy in some key economies (Russia, China, Japan, India). Read it and weep.

Then came Martin Weitzman, a very clever economist from Harvard, who showed decades ago that the choice between the price and quantity approaches mattered a lot when policymakers weren’t certain what the costs and/or benefits of pollution control would be. And now Round Three: In a recent, provocative piece [Download Here], David Weisbach of the University of Chicago questions Weitzman’s conclusions. He concludes that the optimal approach may change if you make the (realistic) assumption that policymakers can alter course in response to new information.

And then there’s another factor to consider: the systems can be designed to look a lot like each other. For example, a cap-and-trade system with a “safety valve,’’ which effectively limits the maximum market price of emissions permits, in many respects mimics the impact of an emissions tax.

So where does that leave us on climate change policy? The key is not to get lost in the trees – any market-based system that rewards people and businesses for emitting less carbon would be a big step forward.

Stavins estimates that some 600 billion tons of carbon – roughly one-sixth of the net increase in atmospheric carbon – could be sequestered annually at a cost of less than $37 a ton. That $37 figure is probably high compared to the cost of increasing energy efficiency in vehicles and buildings, or in phasing out coal-fired power plants in favor of natural gas (at least for a while). But it is far below a variety of other methods for reducing emissions – renewable fuels, nuclear power, carbon capture from power plants — that are being taken seriously these days.

There’s a catch, though. Large amounts of land would be needed to get very far with carbon storage in wood: Sequestering just 50 million tons would take an area eight times the size of Connecticut. And while (believe it or not) there is plenty of underused land out there to support a massive sequestration effort for decades, the regulatory problems would be daunting. In particular, we’d need adequate incentives to generate the appropriate amount of private investment, as well as monitoring mechanisms that functioned well over long periods in a variety of jurisdictions and terrains.

Yes, left unregulated, “externalities ” (like the cost of pollution emitted by a cement factory), may undermine efficiency. Yes “asymmetric information” (is that drug you’re taking for asthma dangerous?) may invite abuse in unregulated markets. But powerful countervailing forces are at work here, too, driving markets toward efficient solutions. Competition rewards clever solutions to both the externalities and asymmetric-information problems. Meanwhile, the courts can force efficiency where competition can’t through the resolution of contract and tort disputes.

But in an as-yet-unpublished paper [Download Here], Shleifer argues that the justice system is the weak link in the chain. So weak, in practice, that government regulation, for all its warts, sometimes increases efficiency. For example, it may be more efficient to require drug companies to prove to the FDA that medicines are safe than to leave the question of harm (and who caused it) to the wisdom and impartiality of judges and juries.

Is Shleifer right? It might more sense to try to reform the judicial system than to depend on inevitably-problematic regulation. But whether Shleifer is right or wrong, the paper is well worth reading for its jargon-free analysis of why high levels of regulation are apparently compatible with high levels of economic efficiency.