Tuesday, April 26, 2011

A dim future for atonal music

Reaction to sound may be cultural, but then again it may not be: Even members of an isolated African tribe appeared bothered by dissonant music.
--Abigail Zuger, NYT, on evidence that tonal music is here to stay

Sunday, April 24, 2011

The best thing ever accomplished by a committee

The King James Bible, which was first published 400 years ago next month, may be the single best thing ever accomplished by a committee. The Bible was the work of 54 scholars and clergymen who met over seven years in six nine-man subcommittees, called “companies.” ... Far from bland, the King James Bible is one of the great masterpieces of English prose. ...

Time and again the language seems to slip almost unconsciously into iambic pentameter — this was the age of Shakespeare, commentators are always reminding us — and right from the beginning the translators embraced the principles of repetition and the dramatic pause: “In the beginning God created the Heauen, and the Earth. And the earth was without forme, and voyd, and darkenesse was vpon the face of the deepe: and the Spirit of God mooued vpon the face of the waters.”

The influence of the King James Bible is so great that the list of idioms from it that have slipped into everyday speech, taking such deep root that we use them all the time without any awareness of their biblical origin, is practically endless: sour grapes; fatted calf; salt of the earth; drop in a bucket; skin of one’s teeth; apple of one’s eye; girded loins; feet of clay; whited sepulchers; filthy lucre; pearls before swine; fly in the ointment; fight the good fight; eat, drink and be merry. ...

Even in its time, the King James Bible was deliberately archaic in grammar and phraseology: an expression like “yea, verily,” for example, had gone out of fashion some 50 years before. The translators didn’t want their Bible to sound contemporary, because they knew that contemporaneity quickly goes out of fashion.
--Charles McGrath, NYT, on the greatness of the KJV

Repeating railroad mistakes

In his State of the Union address, President Obama compared high-speed rail to the 19th-century transcontinental railroads as parallel examples of American innovation. I fear he may be right.

For the country as a whole, the Pacific Railway Act of 1864 and subsequent legislation subsidizing the transcontinental railroads — the lines that crossed the continent from the 98th meridian to the Pacific Coast — were the worst laws money could buy. By encouraging dumb growth, those laws sacrificed public good for private gain, and Americans came to regret it.

It is not that either transcontinental railroads or high-speed railroads are always bad ideas. A compelling case can be made for high-speed rail between Boston and Washington, for example, but the administration proposes building high-speed lines in places where there is no demonstrated demand. In California, construction of the new high-speed rail line from San Francisco to San Diego will begin with a line from Borden to Corcoran in California’s Central Valley. It is already being derided as the train to nowhere. The reduction of federal subsidies has not stopped the project, which now threatens to become a forlorn monument to hubris.

Proponents of the transcontinental railroads promised all kinds of benefits they did not deliver. They claimed that the railroads were needed to save the Union, but the Union was already saved before the first line was completed. The best Western farmlands would have been settled without the railroads; their impact on other lands was often environmentally disastrous. For three decades California commodities could move more cheaply, and virtually as quickly, by sea. The subsidies the railroads received enriched contractors and financiers, but nearly all the railroads went into receivership, some multiple times; the government rescued others. ...

After 1872, the country turned against the subsidizing of large corporations. It was a little late. Fraud and failure left a legacy that would lead to four decades of government attempts to get back what had so carelessly been given away. In the 1890s, Congress was still trying to recover money from the Pacific Railway.

Yet here we are again. The Obama administration proposed a substantial subsidy, $53 billion over six years, to induce investors to take on risk that they are otherwise unwilling to assume.
--Stanford history professor Richard White, NYT, on the curse of not knowing history striking

The economics of British glamour models

A friend who spends his life negotiating with the agents of glamour models explained to me the principles of “boobonomics”. Let's assume a pretty girl, who has been snapped in her bikini for a local newspaper, seeks a big-time career. Her agent phones a men's magazine and proposes for a given sum, say £3,000, that she pose in lingerie.

If she's a hit with the readers, her agent will then suggest that for a greater sum, say £5,000, she will pose topless, but with her nipples concealed by her cupped fingers (“hand bra”). Subsequently her fee will rise for each coy permutation: “hair bra” or “girl-on-girl bra” (two models face to face shielding each other's breasts). Eventually, once this dance of the seven thongs has been exhausted and readers are believed to be slavering with anticipation, the agent will propose that for a huge sum — say £50,000 — the girl will finally reveal all.

But the harshest principle of boobonomics is that after this shoot, the value of the girl's assets — which is what they are in a technical, business sense — collapses. From this point she will only receive £20K for full topless, a sum she only recently received for showing far less. Her product life cycle is reaching an end. Now, however, agents have a new strategy for reviving the brand, rather as when Kit Kat launched peanut or orange-flavoured variants. He proposes that his client have a breast enlargement: would the magazine be interested in the first pictures, you know, when the scars have healed? The going rate for new knockers will never match her initial “reveal”, but raises her value momentarily to, say, £35,000. Jordan, the Milton Friedman of boobonomics, has amassed a great fortune increasing her breast size by increments in three operations.
--Janice Turner, Times of London, on assets that are passing away

Saturday, April 23, 2011

The $23.7 million book on Amazon

A few weeks ago a postdoc in my lab logged on to Amazon to buy the lab an extra copy of Peter Lawrence’s The Making of a Fly – a classic work in developmental biology that we – and most other Drosophila developmental biologists – consult regularly. The book, published in 1992, is out of print. But Amazon listed 17 copies for sale: 15 used from $35.54, and 2 new from $1,730,045.91 (+$3.99 shipping). ...

At first I thought it was a joke – a graduate student with too much time on their hands. But there were TWO new copies for sale, each offered for well over a million dollars. And the two sellers seemed not only legit, but fairly big time (over 8,000 and 125,000 ratings in the last year respectively). The prices looked random – suggesting they were set by a computer. But how did they get so out of whack?

Amazingly, when I reloaded the page the next day, both prices had gone UP! Each was now nearly $2.8 million. ...

On the day we discovered the million dollar prices, the copy offered by bordeebook was 1.270589 times the price of the copy offered by profnath. And now the bordeebook copy was 1.270589 times profnath again. So clearly at least one of the sellers was setting their price algorithmically in response to changes in the other’s price. ...

Once a day profnath set their price to be 0.9983 times bordeebook’s price. The prices would remain close for several hours, until bordeebook “noticed” profnath’s change and elevated their price to 1.270589 times profnath’s higher price. The pattern continued perfectly for the next week. ...

As I amusedly watched the price rise every day, I learned that Amazon retailers are increasingly using algorithmic pricing (something Amazon itself does on a large scale), with a number of companies offering pricing algorithms/services to retailers. ...

The behavior of profnath is easy to deconstruct. They presumably have a new copy of the book, and want to make sure theirs is the lowest priced – but only by a tiny bit ($9.98 compared to $10.00). Why though would bordeebook want to make sure theirs is always more expensive? ...

My preferred explanation for bordeebook’s pricing is that they do not actually possess the book. Rather, they noticed that someone else listed a copy for sale, and so they put it up as well – relying on their better feedback record to attract buyers. But, of course, if someone actually orders the book, they have to get it – so they have to set their price significantly higher – say 1.27059 times higher – than the price they’d have to pay to get the book elsewhere. ...

But, alas, somebody ultimately noticed. The price peaked on April 18th, but on April 19th profnath’s price dropped to $106.23, and bordeebook soon followed suit to the predictable $106.23 * 1.27059 = $134.97. But Peter Lawrence can now comfortably boast that one of the biggest and most respected companies on Earth valued his great book at $23,698,655.93 (plus $3.99 shipping).
--Michael Eisen, it is NOT junk, on how algorithmic trading can lead to strange outcomes. HT: JQ

Friday, April 22, 2011

Corporate finance brainteaser

Warning: Original content by blog author ahead

It's standard corporate finance practice to calculate the value of future cashflows as the expected cashflow divided by a risk-adjusted discount rate.

Suppose you have a project that delivers one year from now a $1 billion gain with 50% probability and a $1 billion loss with 50% probability, so that its expected cashflow is 0. This is an extremely unattractive proposition given its high risk and zero expected reward, but following the usual practice tells us that the value of this cash flow package is 0, since 0/(1+r) = 0 for any r that is not -1. So the discounted cash flow method tells us that we are indifferent between having this gamble and not having this gamble!

How do we reconcile this result with the fact that we would actually be willing to pay a large sum to avoid taking on this gamble?

Blog comments are temporarily open, or you can email me (my address is on my personal homepage). Prize for a correct answer is immortal glory via mention on this blog.

UPDATE: You can find a hint here.

Wednesday, April 20, 2011

Taking the 10,000 hours of practice theory seriously

On his 30th birthday, June 27, 2009, Dan [McLaughlin] had decided to quit his job to become a professional golfer.

He had almost no experience and even less interest in the sport.

What he really wanted to do was test the 10,000-hour theory he read about in the Malcolm Gladwell bestseller Outliers. That, Gladwell wrote, is the amount of time it takes to get really good at anything — "the magic number of greatness." ...

The Dan Plan will take six hours a day, six days a week, for six years. He is keeping diligent records of his practice and progress. People who study expertise say no one has done quite what Dan is doing right now. ...

Back when he first pitched his idea to Christopher Smith, a Nike-affiliated coach who has written a book about golf, Smith was not just uninterested. He was insulted. Golf is famously frustrating. Smith told Dan it was much harder than he thought. He told him to Google K. Anders Ericsson at Florida State University, a psychology professor and a leading expert on expertise.

Dan Googled him. Then called him. Then read his scholarly work. Smith started to think Dan was more committed than he had originally thought. Perhaps Dan was an opportunity. How would he teach golf to a person who was relatively fit, clearly willing and totally untouched, with no bad habits to undo because there were no habits at all?

Dan persuaded Smith to coach him. He got Nike to give him some free shoes, clothes and clubs. He set up a Twitter account, a Facebook page and a blog at thedanplan.com. By now, on Dan's loose team of interested consultants are Smith, Ericsson, a personal trainer in Portland and a professor of kinesiology at the University of Nevada at Las Vegas.

Here's how they have Dan trying to learn golf: He couldn't putt from 3 feet until he was good enough at putting from 1 foot. He couldn't putt from 5 feet until he was good enough putting from 3 feet. He's working away from the hole. He didn't get off the green for five months. A putter was the only club in his bag.

Everybody asks him what he shoots for a round. He has no idea. His next drive will be his first. ...

People, of course, have become world-class after practicing 10,000 hours, in golf and tennis and violin or anything else. But never, not in anything, according to Ericsson, has anyone done it like this: to start at this age, with no experience, and to keep statistics from the beginning, and to be so self-reflective about it, and to last even this long. Dan, Ericsson says, is "like Columbus here, sailing out in new territory."
--Michael Kruse, St. Petersburg Times, on becoming an outlier. HT: Franklin Shaddy

Monday, April 18, 2011

Race and TV watching

Last November, African-Americans watched two hours more television per day, on average, than the national average of 5 hours and 11 minutes, according to a report recently released by Nielsen, the TV ratings agency, which surveyed TV viewing habits by ethnicity. Asian-Americans watched about two hours less than the national average.
--Alex Mindlin, NYT, on where my no-TV lifestyle comes from

Yale Law demographics

Using her copy of the Yale Law School Facebook, [Olivia] Luna [, Yale Law School class of 2013] took a tally and found that Yale and Harvard graduates made up roughly 25 percent of her class. When graduates from Stanford and the other six Ivy League schools were factored in, the percentage reached 50 — but Luna said she was amazed the number was that low. ...

Judging by the Faculty page on the Yale Law School website, roughly 80 percent of Yale Law School faculty attended either Yale or Harvard at some point during their educational careers.
--Nikita Lalwani, Yale Daily News, on the typical Yale Law denizen. Contrast to Yale Medicine's makeup. Yale School of Management's 2011-2012 classes are 8.5% Harvard/Yale graduates.

Thursday, April 14, 2011

Cutting spending by spending more

This agreement between Democrats and Republicans, on behalf of all Americans, is on a budget that invests in our future while making the largest annual spending cut in our history.
--President Obama, April 8, 2011

This week, Congress is moving toward approval of an agreement on the largest spending cut in history to help begin to create a better environment for private-sector job growth.
--House Speaker John Boehner (R-Ohio), USA Today op-ed, April 11, 2011

After a tense few weeks over haggling over the fiscal 2011 budget, the White House and congressional lawmakers cinched a deal that will result in $38.5 billion in cuts. As the quotes above indicate, they then quickly claimed credit for another historic achievement. ...

By any measure, $38.5 billion is a big number, especially when the cuts are squeezed into the rest of the year. But the budget is pretty big too — some $3.8 trillion.
--Glenn Kessler, Washington Post, on using the right denominator

[S]ome significant cuts, including some involving health care, are not expected to produce real savings. This is because the money was not likely to be spent for years though it can be counted as a current reduction under budget rules.

According to a Congressional Budget Office comparison, the bill would produce only $350 million in tangible savings this year, partly because cuts in domestic programs were offset by an increase of about $5 billion for Pentagon programs.

When projected emergency contingency spending overseas is figured in by the budget office, estimated outlays for this year actually increase by over $3 billion.
--Carl Hulse, NYT, on sign errors

Tuesday, April 12, 2011

Are redistributionists more unpleasant people (on average)?

In this paper I expand and test the social dominance thesis using sixteen nationally representative General Social Surveys conducted by the National Opinion Research Center between 1980 and 2004. ...

I first show that respondents who express traditionally racist views (on segregation, interracial marriage, and inborn racial abilities) tend to support greater income redistribution. Traditional racists also tend to oppose free-market capitalism and its consequences, wanting the government to guarantee jobs for everyone and fix prices, wages, and profits. ...

[T]he preference against income redistribution... is not just the result of income or education...

[C]ompared to anti-redistributionists, strong redistributionists have about two to three times higher odds of reporting that in the prior seven days they were angry, mad at someone, outraged, sad, lonely, and had trouble shaking the blues... Not only do redistributionists report more anger, but they report that their anger lasts longer. When asked about the last time they were angry, strong redistributionists were more than twice as likely as strong opponents of leveling to admit that they responded to their anger by plotting revenge. Last, both redistributionists and anti-capitalists expressed lower overall happiness, less happy marriages, and lower satisfaction with their financial situations and with their jobs or housework. ...

[A]nti-redistributionists were generally more likely to report altruistic behavior. In particular, those who opposed more government redistribution of income were much more likely to donate money to charities, religious organizations, and political candidates. The one sort of altruistic behavior that the redistributionists were more likely to engage in was giving money to a homeless person on the street.
--James Lindgren, "What Drives Views on Government Redistribution and Anti-Capitalism: Envy or a Desire for Social Dominance?," Northwestern Law & Economics Research Paper No. 06-10. HT: Marginal Revolution

Monday, April 11, 2011

How to become a fitness model

With the camera rolling, Christian Boeving, a fitness model who is paid to endorse bodybuilding products, freely admitted he had used steroids since he was 16.

That was two years ago, when a friend from the gym he uses, Christopher Bell, was filming “Bigger, Stronger, Faster,” a documentary on steroids that was released on May 30 [2008].

Mr. Boeving said he had nearly forgotten about the interview until he heard from the film’s representatives just before it was shown in January at the Sundance Film Festival. “They said, ‘Look, we’re just letting you know you mentioned the word steroids in it,’ ” Mr. Boeving said. “But I didn’t think I would get into that much trouble, because I thought it was pretty apparent that the top people in the industry use steroids to look like we do.”

A company whose products he endorsed, Iovate Health Sciences, apparently did not think so, and promptly severed Mr. Boeving’s contract. ...

Mr. Boeving had represented over-the-counter dietary supplements in Iovate’s MuscleTech division, including Hydroxycut, which is meant to burn fat, and Nitro-Tech, which is meant to build muscle. ...

“Ever since I was a kid, I’ve been looking at muscle magazines,” Mr. Bell said in an interview. “I would see these guys that are huge, and they’d say, take this pill and you’ll look like this. We know that’s not the case.” ...

“Even in the film, I said, ‘look, I do take the products I said I take — I do take Hydroxycut, I do take Nitro-Tech, but I take other things as well,’ ” he said. “They felt like people were going to walk away feeling like steroids, not MuscleTech products, made my physique what it is, and they have built this industry on telling people, ‘This is what I did to build my physique,’ ” Mr. Boeving said.
--Stephanie Clifford, NYT, on the impossibility of looking like those muscle magazine cover guys naturally

Friday, April 8, 2011

In-N-Out, beware

Jessica Gueghlein never used to give it a second thought when she wanted a good hamburger — she headed to In-N-Out, that drive-through icon of Southern California car culture.

But her affections have strayed. Lately she's been hitting an East Coast upstart aggressively expanding in California — Five Guys Burgers and Fries. ...

"They will definitely be a competitor to In-N-Out," said Steve West, restaurant industry analyst for Stifel, Nicolaus & Co. in St. Louis. "The prices are comparable and the product is comparable." ...

Atlanta businessman Kevin Nelson is making a huge bet on Five Guys. His company, Monument Restaurant Group, has bought the rights to open 300 of the restaurants across the country, 140 of them in the Los Angeles area. ...

At dinner on a recent weeknight in Valencia, Dave and Terry Kasparian sampled their first Five Guys burgers. ...

"In-N-Out's got competition now," Dave Kasparian said. "The only thing missing is the drive-through."
--Sharon Bernstein, LA Times, on burger wars

Not enough rich people

For anyone who wants to discuss the revenue side of the budget debate knowledgably, I highly recommend spending some time with the IRS's Statistics on Income. Table 1.1 under Individual Statistical Tables is a good place to start: http://www.irs.gov/pub/irs-soi...

You can see, for example, that total taxable income in 2008 was $5,488 billion. Taxable income over $100,000 was $1,582 billion, over $200,000 was $1,185 billion, over $500,000 was $820 billion, over $1 million was $616 billion, over $2 million was $460 billion, over $5 million was $302 billion, and over $10 million was $212 billion. ...

You can estimate the effects of various proposals in the best case, which is that each percentage point increase in the marginal rate translates to an equal increase in the effective rate. Going back to 2000 ("Clinton era") marginal rates on income over $200,000, let's call it a 5 percentage point increase in the marginal rate, would therefore yield $59 billion on a static basis. Going from there to a 45% rate on incomes over $1 million (another 5 percentage point increase) yields an additional $31 billion. Or, instead, on top of 2000 rates over $200,000, 50%/60%/70% on $500,000/$5 million/$10 million? An extra $133 billion, or nearly 1% of GDP. That's not accounting for the further middle class tax cuts that are usually proposed along with these "millionaires' taxes."

Now, compare this to deficits of $1,413 billion in 2009 and $1,293 billion in 2010, and using optimistic White House estimates, $1,645 billion in 2011 $1,101 billion in 2012, $768 billion in 2013, and continuing at over $600 billion after.
--Megan McArdle reader Trimalchio on why serious spending cuts are unavoidable

Grain and weight gain

Are grains killing us--or at least, killing our New Years Resolution to lose some weight? ...

It's totally true that if you look at the change in the American diet since the 1960s, grain consumption has gone up dramatically, growing right along with our waistlines. The problem is that this is only true for the 1960s. Check out my sadly less snazzy infographic showing the caloric contribution of various elements to the US food supply since 1910:

As you can see, we have never gotten back up to the nearly 40% of calories from grains that we consumed in the early part of the 20th century. ...

Was it that all the grain consumed before 1950 was healthier whole grain? No. As flour became an industrial product in the late 19th century, mills began processing out the germ and other "whole wheat" elements because the fats in the germ caused the flour to go rancid. By 1914, your great grandmothers were mostly baking with white flour. Polished ("white") rice was similarly well established, and for some of the same reasons. And of course corn, the other major American grain, does not have a healthier "whole" alternative. ...

If you look earlier, you notice that our sturdy forebears were in fact giant balls of carbohydrates (the grain figure doesn't even include the two hundred pounds of potatoes Americans ate every year in the early 20th century.) Yet they were not fat.
--Megan McArdle, Atlantic Monthly, on why there's this continent called Asia where people eat lots of white rice and yet are mostly not fat

Thursday, April 7, 2011

Evidence-based parenting tips

While parents often lose sleep for years, getting kids to sleep through the night is not hard. Real experiments confirm that the Ferber method — let your baby cry in his crib for 10 minutes, briefly comfort him, leave, repeat — works wonders.

Improving kids’ behavior isn’t hard either. Experiments confirm that clear, consistent, mild discipline — like putting kids in the “Naughty Corner” — works even on difficult kids. The problem is that if parents stop imposing discipline, kids soon revert to their old tricks. ...

In the Ask the Children survey, kids’ main complaint about their parents wasn’t lack of face time, but what I call “secondhand stress” — the fact that their parents were often tired and short-tempered. The upshot: One of the best ways to be a better parent is to give yourself a break. Electronic babysitters like television and video games definitely help: When they take your kids off your hands, they don’t just give you extra time to relax; they makes it easier for you to treat your kids well.
--Bryan Caplan, NYT, on making parenting easier

Wednesday, April 6, 2011

Essential and non-essential government employees

With budget talks between Republicans and Democrats far from resolution, official Washington braced on Tuesday for a replay of the Great Government Shutdowns of 1995 and 1996. ...

In any shutdown, the government does not completely cease functioning, of course. ... Employees deemed essential to the functioning of government can come to work. (In ego-driven Washington, a federal shutdown forces high-powered workers to confront their self-worth. Many federal officials insisted on showing up in previous shutdowns, apparently unable to come to grips with idea they might not be considered vital.) ...

Many of those [1.9 million civilian] workers are deemed nonessential, but federal officials have not provided an estimate of the number.

Administration officials said the Treasury would continue one indispensable role: holding regular auctions of federal debt, so the government could borrow more money from the public.
--Sheryl Gay Stolberg and Robert Pear, NYT, on what the federal government really needs

Monday, April 4, 2011

Tasting with your eyes

Without the artificial coloring FD&C Yellow No. 6, Cheetos Crunchy Cheese Flavored Snacks would look like the shriveled larvae of a large insect. Not surprisingly, in taste tests, people derived little pleasure from eating them.

Their fingers did not turn orange. And their brains did not register much cheese flavor, even though the Cheetos tasted just as they did with food coloring.

“People ranked the taste as bland and said that they weren’t much fun to eat,” said Brian Wansink, a professor at Cornell University and director of the university’s Food and Brand Lab. ...

Indeed, color often defines flavor in taste tests. When tasteless yellow coloring is added to vanilla pudding, consumers say it tastes like banana or lemon pudding. And when mango or lemon flavoring is added to white pudding, most consumers say that it tastes like vanilla pudding. Color creates a psychological expectation for a certain flavor that is often impossible to dislodge, Dr. Shelke said. ...

As yet, natural colorings have not proven to be a good alternative. They are generally not as bright, cheap or stable as artificial colorings, which can remain vibrant for years. Natural colorings often fade within days.
--Gardiner Harris, NYT, on why we use artificial coloring

Harvard's vote on Tiger mothering

You can criticize all you want, but you can’t argue with success. Above the Law has confirmed that Sophia Chua-Rubenfeld, the oldest daughter of Amy Chua and fellow YLS professor Jed Rubenfeld, received her Harvard acceptance earlier this week.
--David Lat, Above the Law, on Harvard's response to the parenting referendum. See previous post.

UPDATE (on Yale's vote):
In an e-mail to the [Yale Daily] News Monday, Chua said her daughter has not yet decided between Yale and Harvard. Chua-Rubenfeld will be at Bulldog Days, she added.

Saturday, April 2, 2011

Health coverage increases in name only

Eight-year-old Draven Smith was expelled from school last year for disruptive behavior, and he is being expelled again this year. But his mother and his pediatrician cannot find a mental health specialist to treat him because he is on Medicaid, and the program, which provides health coverage for the poor, pays doctors so little that many refuse to take its patients.

The problem is common here and across the country, especially as states, scrambling to balance their budgets, look for cuts in Medicaid, which is one of their biggest expenditures. ...

Nicole R. Dardeau, 46, a nurse in Opelousas, La., in the heart of Cajun country, can attest to that. She said she could not work because of unbearable pain in her right arm. ... “My Medicaid card is useless for me right now,” Ms. Dardeau said over lunch. “It’s a useless piece of plastic. I can’t find an orthopedic surgeon or a pain management doctor who will accept Medicaid.” ...

[Medicaid] accounts for almost half of the increase in coverage expected under Mr. Obama’s health law, but has received less attention than other parts of the law regulating private insurance. ...

Like many states, Louisiana has been struggling with a fiscal crisis. To hold down costs, it has cut Medicaid payments to doctors, dentists, hospitals and other health care providers several times in the last two years. Many providers report that the cuts, taken together, total 15 percent to 20 percent. ...

In passing the new health law, Congress wanted to make sure current Medicaid recipients would not lose coverage. Under the law, states generally cannot roll back Medicaid eligibility, but they can cut Medicaid in other ways — by reducing provider payment rates or by eliminating optional benefits.

About 20 states cut Medicaid payment rates for doctors last year, according to a survey by the Kaiser Family Foundation. At least 16 governors have proposed rate reductions this year for health care providers.