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Risk Classification And Health Insurance, Georges Dionne, Casey G. Rothschild
Risk Classification And Health Insurance, Georges Dionne, Casey G. Rothschild
Economics Faculty Scholarship
Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. An efficient risk classification system generates premiums that fully reflect the expected cost associated with each class of risk characteristics. This is known as financial equity. In the health sector, risk classification is also subject to concerns about social equity and potential discrimination. We present different theoretical frameworks that illustrate the potential trade-off between efficient insurance provision and social equity. We also review empirical studies on risk classification and residual asymmetric information.
Is Being In School Better? The Impact Of School On Children’S Bmi When Starting Age Is Endogenous, Patricia M. Anderson, Kristin F. Butcher, Elizabeth U. Cascio, Diane Whitmore Schanzenbach
Is Being In School Better? The Impact Of School On Children’S Bmi When Starting Age Is Endogenous, Patricia M. Anderson, Kristin F. Butcher, Elizabeth U. Cascio, Diane Whitmore Schanzenbach
Faculty Research and Scholarship
In this paper, we investigate the impact of attending school on body weight and obesity using a regression-discontinuity design. As is the case with academic outcomes, school exposure is related to unobserved determinants of weight outcomes because some families choose to have their child start school late (or early). If one does not account for this endogeneity, it appears that an additional year of school exposure results in a greater BMI and a higher probability of being overweight or obese. When we compare the weight outcomes of similar age children with one versus two years of school exposure due to …
Optimal Taxation With Rent-Seeking, Casey G. Rothschild, Florian Scheuer
Optimal Taxation With Rent-Seeking, Casey G. Rothschild, Florian Scheuer
Economics Faculty Scholarship
Recent policy proposals have suggested taxing top incomes at very high rates on the grounds that some or all of the highest wage earners are engaged in socially unpro- ductive or counterproductive activities, such as externality imposing speculation in the financial sector. To address this, we provide a model in which agents can choose between working in a traditional sector, where private and social products coincide, and a crowdable rent-seeking sector, where some or all of earned income reflects the capture of pre-existing output rather than increased production. We character- ize Pareto optimal linear and non-linear income tax systems under …
The Market Crash And Mass Layoffs: How The Current Economic Crisis May Affect Retirement, Courtney C. Coile, Phillip B. Levine
The Market Crash And Mass Layoffs: How The Current Economic Crisis May Affect Retirement, Courtney C. Coile, Phillip B. Levine
Economics Faculty Scholarship
Recent dramatic declines in U.S. stock and housing markets have led to widespread speculation that shrinking retirement accounts and falling home equity will lead workers to delay retirement. Yet the weakness in the labor market and its impact on retirement are often overlooked. If older job seekers have difficulty finding work, they may retire earlier than expected. The net effect of the current economic crisis on retirement is thus far from clear. In this paper, we use 30 years of data from the March Current Population Survey to estimate models relating retirement decisions to fluctuations in equity, housing, and labor …
Enhancing Retirement Security Through The Tax Code: The Efficacy Of Tax-Based Subsidies In Life Annuity Markets, William M. Gentry, Casey G. Rothschild
Enhancing Retirement Security Through The Tax Code: The Efficacy Of Tax-Based Subsidies In Life Annuity Markets, William M. Gentry, Casey G. Rothschild
Economics Faculty Scholarship
The under-development of existing annuity markets coupled with the secular trend away from traditional pensions towards defined contribution accounts in the U.S. raises significant con- cerns about the adequacy of retirement income for future retirees. We develop dynamic pro- gramming techniques to evaluate the efficacy of policies designed to address this concern by encouraging annuitization. Our analysis suggests that policies providing monetary incentives through the tax code can indeed significantly enhance annuitization among retirees : our central estimates suggest that tax-exemption based policies which have been recently proposed in Congress have the potential to increase annuitization by as much as …
The Welfare Costs Of Market Restrictions, David Colander, Sieuwerd Gaastra, Casey Rothschild
The Welfare Costs Of Market Restrictions, David Colander, Sieuwerd Gaastra, Casey Rothschild
Economics Faculty Scholarship
In most introductory and intermediate microeconomics textbooks, the measurable welfare effects of price controls, quantitative restrictions, and market restrictions more generally, are depicted as a Harberger triangle. This depiction understates these restrictions’ inefficiency costs because it captures only the ‘‘top-down’’ distortion caused by the wedge these restrictions drive between market-wide quantity demanded and quantity supplied. It ignores the ‘‘bottom-up’’ distortions caused by allocative inefficiencies on the constrained side of the market. In this article we describe a simple graphical exposition of these bottom-up distortions. We argue that this graph can provide students with a picture of both the top-down and …
Sins Of The Sons Of Samuelson: Vision, Pedagogy, And The Zig-Zag Windings Of Complex Dynamics, David Colander, Casey Rothschild
Sins Of The Sons Of Samuelson: Vision, Pedagogy, And The Zig-Zag Windings Of Complex Dynamics, David Colander, Casey Rothschild
Economics Faculty Scholarship
The standard economics text is centered on a vision of a naturally self-regulated, dynamically stable system with a unique global attractor. This paper discusses how we got there and how recent developments in the study of dynamical systems allow us to go beyond that. It traces the evolution of the teaching of economics from Alfred Marshall, who built his supply-and-demand framework within a complexity vision of the economy. It suggests that that complexity vision was lost as economists formalized the supply- demand framework and extended it to the entire economy. This paper argues that the current textbook presentation of economics …
Abortion And Selection, Elizabeth Oltmans Ananat, Jonathan Gruber, Phillip B. Levine, Douglas Staiger
Abortion And Selection, Elizabeth Oltmans Ananat, Jonathan Gruber, Phillip B. Levine, Douglas Staiger
Economics Faculty Scholarship
Abortion legalization in the early 1970s led to dramatic changes in fertility. Some research has suggested that it altered cohort outcomes, but this literature has been limited and controversial. In this paper, we provide a framework for understanding selection mechanisms and use that framework to both address inconsistent past methodological approaches and provide evidence on the long-run impact on cohort characteristics. Our results indicate that lower-cost abortion brought about by legalization altered young adult outcomes through selection. In particular, it increased likelihood of college graduation, lower rates of welfare use, and lower odds of being a single parent.
Subsidized Contraception, Fertility, And Sexual Behavior, Melissa S. Kearney, Phillip B. Levine
Subsidized Contraception, Fertility, And Sexual Behavior, Melissa S. Kearney, Phillip B. Levine
Economics Faculty Scholarship
We examine the impact of recent state-level Medicaid policy changes that expanded eligibility for family planning services to higher-income women and to Medicaid clients whose benefits would expire otherwise. We show that the income-based policy change reduced overall births to non-teens by about 2% and to teens by over 4%; estimates suggest a decline of 9% among newly eligible women. The reduction in fertility appears to have been accomplished via greater use of contraception. Our calculations indicate that allowing higher-income women to receive federally funded family planning cost on the order of $6,800 for each averted birth.
Adverse Selection In Annuity Markets: Evidence From The British Life Annuity Act Of 1808, Casey Rothschild
Adverse Selection In Annuity Markets: Evidence From The British Life Annuity Act Of 1808, Casey Rothschild
Economics Faculty Scholarship
We study adverse selection using data from an 1808 Act of British Parliament that effectively opened a market for life annuities. Our analysis indicates significant selection effects. The evidence for ad- verse selection is strongest for a sub-sample of annuitants whose an- nuities were purchased by profit-seeking speculators, a sub-sample in which “advantageous selection” resulting from multi-dimensional het- erogeneity is unlikely to have been significant. These results support the view that adverse selection can be masked by advantageous se- lection in empirical studies of standard insurance markets. JEL N23 D82.
The Impact Of Children's Public Health Insurance Expansions On Educational Outcomes, Phillip B. Levine, Diane Whitmore Schanzenbach
The Impact Of Children's Public Health Insurance Expansions On Educational Outcomes, Phillip B. Levine, Diane Whitmore Schanzenbach
Economics Faculty Scholarship
This paper examines the impact of public health insurance expansions through both Medicaid and SCHIP on children's educational outcomes, measured by 4th and 8th grade reading and math test scores, available from the National Assessment of Educational Progress (NAEP). We use a triple difference estimation strategy, taking advantage of the cross-state variation over time and across ages in children’s health insurance eligibility. Using this approach, we find that test scores in reading, but not math, increased for those children affected at birth by increased health insurance eligibility. A 50 percentage point increase in eligibility is found to increase reading test …
The Evolution Of Reciprocity In Sizable Human Groups, Casey G. Rothschild
The Evolution Of Reciprocity In Sizable Human Groups, Casey G. Rothschild
Economics Faculty Scholarship
The scale and complexity of human cooperation is an important and unresolved evo- lutionary puzzle. This article uses the finitely repeated n person Prisoners’ Dilemma game to illustrate how sapience can greatly enhance group-selection effects and lead to the evolutionary stability of cooperation in large groups. This affords a simple and direct explanation of the human “exception.”
Obesity, Disability, And The Labor Force, Kristin F. Butcher, Kyung H. Park
Obesity, Disability, And The Labor Force, Kristin F. Butcher, Kyung H. Park
Faculty Research and Scholarship
No abstract provided.
Redistribution By Insurance Market Regulation: Analyzing A Ban On Gender-Based Retirement Annuities, Amy Finkelstein, James Poterba, Casey Rothschild
Redistribution By Insurance Market Regulation: Analyzing A Ban On Gender-Based Retirement Annuities, Amy Finkelstein, James Poterba, Casey Rothschild
Economics Faculty Scholarship
This paper illustrates how a model of an insurance market with asymmetric information can be calibrated and solved to evaluate the economic consequences of government regulation. We estimate the impact of restricting gender-based pricing in the United Kingdom retirement annuity market, a market in which individuals are required to annuitize their retirement savings by selecting among a range of different annuity contracts. After calibrating a lifecycle utility model and estimating a model of annuitant mortality that allows for unobserved heterogeneity, we solve for the range of equilibrium contract structures with and without gender-based insurance pricing. Eliminating gender-based annuity pricing is …
Childhood Disadvantage And Obesity: Is Nurture Trumping Nature?, Patricia M. Anderson, Kristin F. Butcher, Diane Whitmore Schanzenbach
Childhood Disadvantage And Obesity: Is Nurture Trumping Nature?, Patricia M. Anderson, Kristin F. Butcher, Diane Whitmore Schanzenbach
Faculty Research and Scholarship
Obesity has been one of the fastest growing health concerns among children, particularly among disadvantaged children. For children overall, obesity rates have tripled from 5% in the early 1970s to about 15% by the early 2000s. For disadvantaged children, obesity rates are closer to 20%. In this paper, we first examine the impact of various measures of disadvantage on children's weight outcomes over the past 30 years, finding that the disadvantaged have gained weight faster. Over the same period, adult obesity rates have grown, and we expect parental obesity to be closely tied to children's obesity, for reasons of both …
Labor Market Shocks And Retirement: Do Government Programs Matter?, Courtney C. Coile, Phillip B. Levine
Labor Market Shocks And Retirement: Do Government Programs Matter?, Courtney C. Coile, Phillip B. Levine
Economics Faculty Scholarship
This paper examines how unemployment affects retirement and whether the Unemployment Insurance (UI) system and Social Security (SS) system affect how older workers respond to labor market shocks. To do so, we use pooled cross-sectional data from the March Current Population Survey (CPS) as well as March CPS files matched between one year and the next and longitudinal data from the Health and Retirement Survey (HRS). We find that downturns in the labor market increase retirement transitions. The magnitude of this effect is comparable to that associated with moderate changes in financial incentives to retire and to the threat of …
Assessing The Impact Of Job Loss On Workers And Firms, Kristin F. Butcher, Kevin F. Hallock
Assessing The Impact Of Job Loss On Workers And Firms, Kristin F. Butcher, Kevin F. Hallock
Faculty Research and Scholarship
No abstract provided.
Bulls, Bears, And Retirement Behavior, Courtney C. Coile, Phillip B. Levine
Bulls, Bears, And Retirement Behavior, Courtney C. Coile, Phillip B. Levine
Economics Faculty Scholarship
The authors examine the relationship between stock market performance and retirement behavior. They first present a descriptive analysis of the wealth holdings of older households and simulate the labor supply response among stockholders necessary to generate observed retirement patterns. Few house holds, they find, have substantial stock holdings, and these holdings would have to be extremely responsive to market fluctuations to explain observed labor force patterns. The authors then exploit stock market fluctuations since the early 1980s (particularly the boom and bust between 1995 and 2002), along with variation in stock exposure, to generate a double quasi-experiment, comparing the retirement …
Bringing Together Policymakers, Researchers, And Practitioners To Discuss Job Loss, Kristin F. Butcher, Kevin F. Hallock
Bringing Together Policymakers, Researchers, And Practitioners To Discuss Job Loss, Kristin F. Butcher, Kevin F. Hallock
Faculty Research and Scholarship
No abstract provided.
Abortion Policy And The Economics Of Fertility, Phillip B. Levine
Abortion Policy And The Economics Of Fertility, Phillip B. Levine
Economics Faculty Scholarship
No abstract provided.
Abortion Policy And Fertility Outcomes: The Eastern European Experience, Phillip B. Levine, Douglas Staiger
Abortion Policy And Fertility Outcomes: The Eastern European Experience, Phillip B. Levine, Douglas Staiger
Economics Faculty Scholarship
Theory suggests that abortion restrictions will influence fertility outcomes such as pregnancy, abortion, and birth. This paper exploits the variations in abortion policy generated in Eastern Europe in the late 1980s and early 1990s to examine their impact on fertility outcomes. We distinguish among countries with severe, moderate, and few restrictions on abortion access and examine the impact of changes across all three categories. As we hypothesize, the results indicate that countries that changed from very restrictive to liberal abortion laws experienced a large reduction in births. Changes from modest restrictions to abortion available on request, however, led to no …
Payoff Continuity In Incomplete Information Games: A Comment, Casey G. Rothschild
Payoff Continuity In Incomplete Information Games: A Comment, Casey G. Rothschild
Economics Faculty Scholarship
Kajii and Morris (J. Econ. Theory 1998, 267-276) provide necessary and sufficient conditions for two priors to be strategically close. The restrictiveness of these con- ditions establishes that strategic behavior can be highly sensitive to the assumed prior. Their results thus recommend care in the use of priors in economic modelling. Unfortunately, their proof of a central proposition fails for zero probability types. This comment corrects their proof to account for these cases.
Children's Welfare Exposure And Subsequent Development, Phillip B. Levine, David J. Zimmerman
Children's Welfare Exposure And Subsequent Development, Phillip B. Levine, David J. Zimmerman
Economics Faculty Scholarship
We examine the extent to which children are exposed to the welfare system through their mother's receipt of benefits and its impact on several developmental outcomes. Using data from the matched mother-child file from the National Longitudinal Survey of Youth (NLSY), we find that children's welfare exposure is substantial. By age 10 over one-third of all children will have lived in a welfare household; black, non-Hispanic children face a much higher rate of exposure. Simple correlations suggest a strong negative relationship between maternal welfare receipt and children's outcomes. In this paper we implement three alternative strategies (instrumental variables, sibling difference, …
Discrimination In The Small Business Credit Market, David G. Blanchflower, Phillip B. Levine, David J. Zimmerman
Discrimination In The Small Business Credit Market, David G. Blanchflower, Phillip B. Levine, David J. Zimmerman
Economics Faculty Scholarship
This paper uses data from the 1993 National Survey of Small Business Finances to determine the extent to which minority-owned small businesses face constraints in the credit market beyond those faced by white-owned small businesses. First, we present qualitative evidence indicating that black- and white-owned firms report similar concerns about the factors that may affect their businesses except that blacks are far more likely to report problems with credit availability. Second, we conduct an econometric analysis of loan denial probabilities by race and find that black-owned small businesses are almost three times more likely to have a loan application denied. …
Extended Benefits And The Duration Of Ui Spells: Evidence From The New Jersey Extended Benefit Program, David Card, Phillip B. Levine
Extended Benefits And The Duration Of Ui Spells: Evidence From The New Jersey Extended Benefit Program, David Card, Phillip B. Levine
Economics Faculty Scholarship
In 1996 a political trade-off in the New Jersey legislature led to a six-month program that provided up to 13 additional weeks of exhausted their regular benefit entitlement. We use this unique episode to provide new evidence on the effect of changes in the duration of unemployment insurance (UI) benefits on the behavior of UI claimants. Unlike most benefit extensions, the New Jersey Extended Benefit (NJEB) program arose during a period of stable economic conditions, allowing us to sidestep the important issue of endogenous policy adoption. We use aggregate state-level data and administrative records for individual UI claimants from before, …
Less-Skilled Workers, Welfare Reform, And The Unemployment Insurance System, Cynthia K. Gustafson, Phillip B. Levine
Less-Skilled Workers, Welfare Reform, And The Unemployment Insurance System, Cynthia K. Gustafson, Phillip B. Levine
Economics Faculty Scholarship
The declining economic position over the past two decades of those workers with less skill increases the importance of the unemployment insurance (UI) system in providing a safety net during periods of unemployment. Recent welfare reform legislation, designed to encourage labor market entry of typically very low-skilled workers who are likely to have unstable work patterns at best, potentially makes the UI system an even more critical component of the safety net. This paper seeks to determine how less-skilled workers typically fare in the UI system, estimating their likelihood of becoming eligible for and collecting benefits. We find that many …
Abortion Legalization And Child Living Circumstances: Who Is The 'Marginal Child'?, Jonathan Gruber, Phillip B. Levine, Douglas Staiger
Abortion Legalization And Child Living Circumstances: Who Is The 'Marginal Child'?, Jonathan Gruber, Phillip B. Levine, Douglas Staiger
Economics Faculty Scholarship
We estimate the impact of changes in abortion access in the early 1970s on the average living standards of cohorts born in those years. In particular, we address the selection inherent in the abortion decision: is the marginal child who is not born when abortion access increases more or less disadvantaged than the average child? Legalization of abortion in five states around 1970, followed by legalization nationwide due to the 1973 Roe v. Wade decision, generates natural variation which can be used to estimate the effect of abortion access. We find that cohorts born after abortion was legalized experienced a …
More Bad News For Smokers? The Effects Of Cigarette Smoking On Labor Market Outcomes, Phillip B. Levine, Tara A. Gustafson, Ann D. Velenchik
More Bad News For Smokers? The Effects Of Cigarette Smoking On Labor Market Outcomes, Phillip B. Levine, Tara A. Gustafson, Ann D. Velenchik
Economics Faculty Scholarship
Using National Longitudinal Survey of Youth data, the authors exam- ine the effect of smoking on wages. Their analysis controls for differ- ences in individual characteristics that may be correlated with both smoking and wages, including unobservable person-specific characteris- tics that are constant over time, and unobservable characteristics that are constant within a family. Estimates from alternative specifications indicate that smoking reduced wages by roughly 4-8%. Empirical tests of three potential explanations for this finding yield no conclusive results.
Roe V. Wade And American Fertility, Phillip B. Levine, Douglas Staiger, Thomas J. Kane, David J. Zimmerman
Roe V. Wade And American Fertility, Phillip B. Levine, Douglas Staiger, Thomas J. Kane, David J. Zimmerman
Economics Faculty Scholarship
We consider the effect of abortion legalization on births in the United States. A simple theoretical model demonstrates that the impact of abortion legalization on the birth rate is ambiguous, because both pregnancy and abortion decisions could be affected. We use variation in the timing of legalization across states in the early 1970's to estimate the effect of abortion on birth rates. Our findings indicate that states legalizing abortion experienced a 5% decline in births relative to other states. The decline among teens, women over 35, and nonwhite women was even greater: 13%, 8%, and 12% respectively. Out-of-wedlock births declined …
An Empirical Analysis Of The Welfare Magnet Debate Using The Nlsy, Phillip B. Levine, David J. Zimmerman
An Empirical Analysis Of The Welfare Magnet Debate Using The Nlsy, Phillip B. Levine, David J. Zimmerman
Economics Faculty Scholarship
This paper examines the extent to which differences in welfare generosity across states leads to interstate migration. Using microdata from the National Longitudinal Survey of Youth (NLSY) between 1979 and 1992, we employ a quasi-experimental design that utilizes the categorical eligibility of the welfare system. The pattern of cross-state moves among poor single women with children who are likely to be eligible for benefits is compared to the pattern among other poor households. We find little evidence indicating that welfare-induced migration is a widespread phenomenon.