Social and Behavioral Sciences Commons^™

Intended And Unintended Effects Of E-Cigarette Taxes On Youth Tobacco Use, Rahi Abouk, Charles J. Courtemanche, Dhaval Dave, Bo Feng, Abigail S. Friedman, Johanna Catherine Maclean, Michael F. Pesko, Joseph J. Sabia, Samuel Safford

Institute for the Study of Free Enterprise Working Papers

Over the past decade, rising youth use of e-cigarettes and other electronic nicotine delivery systems (ENDS) has prompted aggressive regulation by state and local governments. Between 2010 and 2019, ten states and two large counties adopted ENDS taxes. Applying a continuous treatment difference-in-differences approach to data from two large national datasets (Monitoring the Future and the Youth Risk Behavior Surveillance System), this study explores the impact of ENDS taxes on youth tobacco use. We find that ENDS taxes reduce youth e-cigarette consumption, with estimated e-cigarette tax elasticities of -0.06 to -0.21. However, we estimate sizable positive cigarette cross-tax elasticities, suggesting …

School Reopenings, Mobility, And Covid-19 Spread: Evidence From Texas, Charles J. Courtemanche, Anh Le, Aaron Yelowitz, Ron Zimmer

Institute for the Study of Free Enterprise Working Papers

This paper examines the effect of fall 2020 school reopenings in Texas on county-level COVID19 cases and fatalities. Previous evidence suggests that schools can be reopened safely if community spread is low and public health guidelines are followed. However, in Texas, reopenings often occurred alongside high community spread and at near capacity, likely making it difficult to meet social distancing recommendations. Using event-study models and hand-collected instruction modality and start dates for all school districts, we find robust evidence that reopening Texas schools gradually but substantially accelerated the community spread of COVID-19. Results from our preferred specification imply that school …

Targeting Intensive Job Assistance To Ex-Offenders By The Nature Of Offense: Results From A Randomized Control Trial, Christopher R. Bollinger, Aaron Yelowitz

Institute for the Study of Free Enterprise Working Papers

As many as two-thirds of newly-released inmates will be arrested for a new offense within three years. This study evaluates the impact of job assistance on recidivism rates among ex-offenders. The job assistance program, run though the private company America Works, uses a network of employers to place clients. Ex-offenders were randomly assigned to intensive job assistance (treatment group) or the standard program (control group). The intensive program is meant to improve average work readiness for ex-offenders. It reduces the likelihood of subsequent arrest among non-violent ex-offenders, but has little effect on violent ex-offenders. The re-arrest rate for non-violent ex-offenders …

How Does Occupational Licensing Affect Entry Into The Medical Field? An Examination Of Emts, Aaron Yelowitz, Samuel J. Ingram

Institute for the Study of Free Enterprise Working Papers

The COVID-19 pandemic has led to temporary suspensions of many occupational licensing laws, especially for health care professionals, in an effort to manage surges in health care demand. The crisis highlights more general concerns about occupational licensing laws, yet convincing empirical evidence on the degree to which such laws have inhibited entry into health care professions is scarce because most studies must rely on cross-sectional variation to identify such effects. In this study, we indirectly examine how occupational licensing affects the choice to become an Emergency Medical Technician (EMT) by exploiting the demand-side shock from the Affordable Care Act (ACA). …

Some Regional Economic Perspectives On Covid-19 Impacts, Paul A. Coomes

Institute for the Study of Free Enterprise Working Papers

It has been about eight months since the Covid-19 pandemic began sweeping across America, causing the well-known health care emergency, and major economic and fiscal distortions. Presumably, we are in the last stages of the damage, as activity has picked up in most realms of daily life. However, recovery problems linger in many areas, including air travel, cruises, hotels, conventions, concerts, and schools. While not over, enough information has emerged to start documenting the regional economic impacts around Kentucky. This note examines the latest public data to study the apparent economic and fiscal damage related to Covid responses, public and …

Did Covid-19 Change Life Insurance Offerings?, Timothy F. Harris, Aaron Yelowitz, Charles J. Courtemanche

Institute for the Study of Free Enterprise Working Papers

The profitability of life insurance offerings is contingent on accurate projections and pricing of mortality risk. The COVID-19 pandemic created significant uncertainty, with dire mortality predictions from early forecasts resulting in widespread government intervention and greater individual precaution that reduced the projected death toll. We analyze how life insurance companies changed pricing and offerings in response to COVID-19 using monthly data on term life insurance policies from Compulife. We estimate event-study models that exploit well-established variation in the COVID-19 mortality rate based on age and underlying health status. Despite the increase in mortality risk and significant uncertainty, we find limited …

Has Anheuser-Busch Let The Steam Out Of Craft Beer? The Economics Of Acquiring Craft Brewers, Kenneth G. Elzinga, Alexander J. Mcglothlin

Institute for the Study of Free Enterprise Working Papers

The craft beer segment in the U.S. has grown from a meager 20 brewers in the 1980s to over 7,000 today and is approaching a 15% market share. Macrobrewers initially responded by internal product differentiation but then began acquiring craft brewers, provoking concerns about the continuing viability of independent, local brewers. We analyze the economic consequences of the most prominent of these acquisitions: the Anheuser-Busch InBev (ABI) purchase of Goose Island in 2011. Using variation in pre-acquisition ABI market share to account for the effects of the distribution tier in the beer industry and the influence of macrobrewers on the …

Federal Student Loan Servicing Accountability And Incentives In Contracts, Rajeev Darolia, Andrew Sullivan

Institute for the Study of Free Enterprise Working Papers

Student loan servicers play a critical and underappreciated role in federal student loan programs. The federal government contracts out to servicers an array of many of the most critical functions related to student loan repayment, including account management, payment processing, and the provision of information about payment plans and solutions for distressed borrowers. In fact, most borrowers’ interactions with federal student loan repayment are almost exclusively with their servicer. We aim to improve upon the scarce research literature about federal student loan servicers by exploring the complicated set of measures that determine how servicers are compensated for servicing each debtor …

Measuring The Spread Of Covid-19 In Kentucky: Do We Have The Right Data?, Kenneth R. Troske, Paul A. Coomes

Institute for the Study of Free Enterprise Working Papers

We examine various measures of COVID-19 infections, hospitalizations and deaths, with an emphasis on data for Kentucky. We find that: Data on the number of new reported cases of the disease obtained from convenience samples (as opposed to representative random samples) is an inaccurate measure of the spread of the disease in the State. Using CDC data and national studies, it appears that there were ten times the number of infections in March than reported for Kentucky at the time and by September the State is still capturing only one out of two people infected.

A better measure of new …

Some Basics Of Capitalism And Socialism And Implications For Human Liberty, Morality, And Fairness, John Garen

Institute for the Study of Free Enterprise Working Papers

This essay outlines the big-picture aspects of capitalism and socialism, and uses this overview to discuss human liberty and economic liberty in each system. Additionally, I note that some have argued that capitalism is unfair or immoral and so I consider three specific and common moral standards in this regard. They are: (i) “From each according to his ability, to each according to his needs;” (ii) “People should get what they earn;” and (iii) “’Agreement without conformity’ or ‘conformity without agreement.’” Capitalism is centered on individual rights and private ownership, while socialism awards decision-making powers to government. The former is …

Racial And Ethnic Disparities In Covid-19: Evidence From Six Large Cities, Joseph Benitez, Charles J. Courtemanche, Aaron Yelowitz

Institute for the Study of Free Enterprise Working Papers

As of June 2020, the coronavirus pandemic has led to more than 2.3 million confirmed infections and 121 thousand fatalities in the United States, with starkly different incidence by race and ethnicity. Our study examines racial and ethnic disparities in confirmed COVID-19 cases across six diverse cities – Atlanta, Baltimore, Chicago, New York City, San Diego, and St. Louis – at the ZIP code level (covering 436 “neighborhoods” with a population of 17.7 million). Our analysis links these outcomes to six separate data sources to control for demographics; housing; socioeconomic status; occupation; transportation modes; health care access; long-run opportunity, as …

Did Social-Distancing Measures In Kentucky Help To Flatten The Covid-19 Curve?, Charles J. Courtemanche, Joseph Garuccio, Anh Le, Joshua C. Pinkston, Aaron Yelowitz

Institute for the Study of Free Enterprise Working Papers

In the absence of a vaccine or more effective treatment options, containing the spread of novel coronavirus disease 2019 (COVID-19) must rely on non-pharmaceutical interventions. All U.S. states adopted social-distancing measures in March and April of 2020, though they varied in both timing and scope. Kentucky began by closing public schools and restaurant dining rooms on March 16th before progressing to closing other non-essential businesses and eventually issuing a “Healthy at Home” order with restrictions similar to the shelter-in-place (SIPO) orders adopted by other states. We aim to quantify the impact of these measures on COVID-19 case growth in the …

Chain Restaurant Calorie Posting Laws, Obesity, And Consumer Welfare, Charles J. Courtemanche, David Frisvold, David Jimenez-Gomez, Mariétou H. Ouayogodé, Michael Price

Institute for the Study of Free Enterprise Working Papers

The 2010 Patient Protection and Affordable Care Act (ACA) introduced a mandate requiring chain restaurants to post calorie counts on menus and menu boards. This paper investigates whether and why calorie posting laws work. To do so, we develop a model of calories consumed that highlights two potential channels through which mandates influence choice and outlines an empirical strategy to disentangle these alternatives. We test the predictions of our model using data from the Behavioral Risk Factor Surveillance System to compare changes in body mass index (BMI), obesity, and consumer well-being in locations that implemented calorie-posting laws between 2008 and …

The Effects Of E-Cigarette Taxes On E-Cigarette Prices And Tobacco Product Sales: Evidence From Retail Panel Data, Chad Cotti, Charles J. Courtemanche, Joanna Catherine Maclean, Erik Nesson, Michael F. Pesko, Nathan Tefft

Institute for the Study of Free Enterprise Working Papers

We explore the effect of e-cigarette taxes enacted through 2017 in eight states and two large counties on e-cigarette prices, e-cigarette sales, and sales of other tobacco products. We use the Nielsen Retail Scanner data for the years 2011 to 2017, comprising approximately 35,000 retailers nationally. We calculate a Herfindahl–Hirschman Index of 0.251 for retail-based purchases of e-cigarettes, indicating high market concentration. We estimate a tax-to-price pass-through of 1.55 (p < 0.01) and an e-cigarette own-price elasticity of -2.6 (p < 0.01) for the average e-cigarette tax. We also estimate a positive cross-price elasticity of demand for e-cigarettes and traditional cigarettes of roughly 1.1 for the average tax, suggesting that e-cigarettes and traditional cigarettes are economic substitutes. Our results suggest that higher e-cigarette taxes would increase e-cigarette prices and reduce e-cigarette sales, with an unintended effect of increasing traditional cigarette sales. We simulate that for every one standard e-cigarette pod (a device that contains liquid nicotine in e-cigarettes) of 0.7 ml no longer purchased as a result of an e-cigarette tax, the same tax increases traditional cigarettes purchased by 6.2 extra packs.

Time Spent Exercising And Obesity: An Application Of Lewbel’S Instrumental Variables Method, Charles J. Courtemanche, Joshua C. Pinkston, Jay Stewart

Institute for the Study of Free Enterprise Working Papers

This paper examines the role physical activity plays in determining body mass using data from the American Time Use Survey. Our work is the first to address the measurement error that arises when time use during a single day—rather than average daily time use over an extended period—is used as an explanatory variable. We show that failing to account for day-to-day variation in activities results in the effects of time use on a typical day being understated. Furthermore, we account for the possibility that physical activity and body mass are jointly determined by implementing Lewbel’s instrumental variables estimator that exploits …

Can Mergers And Acquisitions Internalize Positive Externalities In Funding Innovation?, Leo Li, Mark Liu

Institute for the Study of Free Enterprise Working Papers

Fundamental innovation usually involves huge upfront costs, but the benefits are spread across various sectors of the economy. Given the large costs and limited appropriability of the benefits associated with the innovation, individual firms underinvest in these innovations relative to the socially optimal level. We find that mergers and acquisitions (M&As) can internalize the positive externalities by merging firms from both the user industries and the producer industries of an innovation. Using the US patent citation dataset, we define the user and producer relationship between each pair of industries and between each pair of industry and technological class. We then …

Medicaid Coverage Across The Income Distribution Under The Affordable Care Act, Charles J. Courtemanche, James Marton, Aaron Yelowitz

Institute for the Study of Free Enterprise Working Papers

This chapter examines trends in Medicaid enrollment across the income distribution after the ACA’s Medicaid expansion.Using data from the American Community Survey between 2012and 2017, we compare Medicaid coverage over time in 9 states that expanded Medicaid in 2014 with no previous expansion for able-bodied, working-age adults with 12 states that had not expanded Medicaid by 2019 and also had no previous expansion for such adults. A difference-in-differences model is used to formalize this comparison. Similar to many previous studies, we find that Medicaid coverage increased dramatically for income-eligible adults under 138% of the federal poverty level (FPL). In addition, …

The Allocation And Exchange Of Property Rights As A Way To Understand Comparative Economics Systems And Managerial Economics, John Garen

Institute for the Study of Free Enterprise Working Papers

This paper discusses how economic systems can be described by the manner that property rights are allocated to individuals, to the government, or to interests groups. Property rights entail control of use of assets, claim on the net income from an asset, and transferability of the previous two. Economics systems (e.g., capitalism, socialism, cronyism) are characterized by who holds these rights, in whole or in part, and this determines the success or failure of an economy. A related analysis is applied to understanding business organization, e.g., the corporate and non-corporate form, franchising, and employee compensation methods. Each entails a (voluntary) …

The Effects Of Traditional Cigarette And E-Cigarette Taxes On Adult Tobacco Product Use, Michael F. Pesko, Charles J. Courtemanche, Joanna Catherine Maclean

Institute for the Study of Free Enterprise Working Papers

We study the effects of traditional cigarette tax rate changes and e-cigarette tax adoption on use of these products among US adults. Data are drawn from the Behavioral Risk Factor Surveillance System and National Health Interview Survey data over the period 2011to 2017. Using a difference-in-differences model, we find that higher traditional cigarette taxes reduce adult traditional cigarette use and increase adult e-cigarette use, suggesting that the products are economic substitutes. E-cigarette tax adoption reduces e-cigarette use, with some heterogeneity across groups, and dilutes the own-tax responsiveness of traditional cigarettes.

Social Security And Medicare Spending Growth: Is It Just More Seniors Or More Per Senior?, John Garen

Institute for the Study of Free Enterprise Working Papers

Long-term federal budget forecasts show sizable increases in federal spending in the coming decades. This is concerning to those who worry that the growth of government will diminish incentives, reduce productivity, and limit economic growth. A large share of the forecasted increase in spending is due to Social Security and Medicare. This paper considers how much of this increase is simply due to the growth in the eligible population and how much is due to growth in spending per beneficially. The findings show both the former and the latter account for sizable shares of the growth. Thus, there is room …

The Federal-Private Wage Differential: How Has It Evolved?, Sun-Ki Choi, John Garen

Institute for the Study of Free Enterprise Working Papers

Federal, state, and local budget issues in the aftermath of the Great Recession stimulated a revival of interest in government worker pay. In the paper, we study the evolution of the federal-private pay differential from 1995 to 2017 using Current Population Survey data, enabling us to examine the current pay gap and how it has changed over time. Wage regressions are estimated by year for federal and private sector workers and used to calculate the yearly federal-private wage differential. To deal with unobserved heterogeneity, we adopt control function methods. We also estimate of the probability of receiving employer-provided health insurance …

Investment In Human Capital And Labor Mobility: Evidence From A Shock To Property Rights, Christopher P. Clifford, William C. Gerken

Institute for the Study of Free Enterprise Working Papers

We show that the assignment of property rights to client relationships affects employee behavior in the industry for financial advice. Our identification comes from staggered firm-level entry into the Protocol for Broker Recruiting. The protocol effectively transfers the ownership of the client relationship from the firm to the employee. We document that entering into the protocol increases employee labor mobility among member firms. Further, we find that upon protocol inclusion, employees are less likely to generate customer complaints and more likely to invest in their own general human capital, but less likely to invest in firm-specific human capital. We use …

Can Credit Rating Agencies Affect Election Outcomes?, Igor Cunha, Miguel A. Ferreira, Rui C. Silva

Institute for the Study of Free Enterprise Working Papers

We show that credit rating agencies can have a significant effect on election outcomes. We identify these effects by exploiting exogenous variation in municipal bond ratings due to Moody’s recalibration of its scale in 2010. We find that incumbent politicians in upgraded municipalities experience an increase in their likelihood of reelection and their vote shares. These rating upgrades improve voters’ opinions about the incumbent and produce positive wealth effects through voters’ holdings of local municipal bonds. In addition, rating upgrades cause an expansion of local governments’ debt capacity that allows the incumbent to increase spending and improve local economic conditions.

Ambulance Service Ownership And Management: How It Affects Quality Of Service Delivery For Medicare Patients, Sookti Chaudhary, Kenneth R. Troske, Suzanne Troske, Alison Davis

Institute for the Study of Free Enterprise Working Papers

This study investigates how ownership and/or management affects ambulance services across the United States. We investigate whether ambulance quality, measured by patient transportation time, varies by organization type. We estimate the effect of ownership structure on response time variables using data from the National EMS Information System (NEMSIS) for the years 2010–2015, the most comprehensive data set on emergency medical services. Focusing on ground transportation (as opposed to air and water transportation) and on Medicare-eligible (age 65 years and older) patients, we find that, on average, ambulance services owned by fire departments respond faster than those managed by other types …

Nominal Gdp Versus Price Level Targeting: An Empirical Evaluation, James S. Fackler, W. Douglas Mcmillin

Institute for the Study of Free Enterprise Working Papers

In response to the ongoing discussion in the literature of the appropriate framework for monetary policy, we compare two of the most frequently discussed alternatives to inflation targeting—targeting either the level of nominal GDP or the price level—within the context of a simple vector autoregressive (VAR) model. Our approach can be considered a constrained-discretion approach. The model is estimated using quarterly data over the period 1979:4-2003:4, a period in which the economy was buffeted by substantial supply and demand shocks. The paths of the federal funds rate, nominal GDP, real GDP, and the price level under nominal GDP and price …

Dissecting The Impact Of Import Competition On U.S. Earnings Inequality, Felipe Benguria

Institute for the Study of Free Enterprise Working Papers

This paper studies the impact of globalization on U.S. earnings inequality in the context of rapidly growing import competition from China. The increase in U.S. inequality during 2000-2007 has been driven entirely by changes within regions}. While the existing literature has established differences in wage growth across regions as a consequence of import competition, understanding the impact of globalization on rising U.S. inequality requires then focusing on its impact on inequality within regions. Exploiting variation in exposure to this unprecedented trade shock across local labor markets I find that import competition causes an increase in earnings inequality. This impact occurs …

Effects Of The Affordable Care Act On Health Behaviors After Three Years, Charles J. Courtemanche, James Marton, Benjamin Ukert, Aaron Yelowitz, Daniela Zapata

Institute for the Study of Free Enterprise Working Papers

This paper examines the impacts of the Affordable Care Act (ACA) – which substantially increased insurance coverage through regulations, mandates, subsidies, and Medicaid expansions – on behaviors related to future health risks after three years. Using data from the Behavioral Risk Factor Surveillance System and an identification strategy that leverages variation in pre-ACA uninsured rates and state Medicaid expansion decisions, we show that the ACA increased preventive care utilization along several dimensions, but also increased risky drinking. These results are driven by the private portions of the law, as opposed to the Medicaid expansion. We also conduct subsample analyses by …

Educational Test Scores, Education Spending, And Productivity In Public Education: National Trends And Evidence Across States And Over Time, 1990-2015, John Garen, Rex Bray

Institute for the Study of Free Enterprise Working Papers

We examine national trends in educational funding, test score outcomes, and productivity as well as variations in funding and test scores over time and across states to assess how changes in educational spending are (or are not) related to changes in educational test score outcomes for states. National trends show small increases in test scores, large increases in educational funding (until the last recession), and a continued fall in educational productivity. The cross-state, over time analysis indicates a statistically significant but very small association of state funding to test scores; so small that large changes in funding have little effect …

Early Effects Of The Affordable Care Act On Health Care Access, Risky Health Behaviors, And Self-Assessed Health, Charles J. Courtemanche, James Marton, Benjamin Ukert, Aaron Yelowitz, Daniela Zapata

Institute for the Study of Free Enterprise Working Papers

The goal of the Affordable Care Act (ACA) was to achieve nearly universal health insurance coverage through a combination of mandates, subsidies, marketplaces, and Medicaid expansions, most of which took effect in 2014. We use data from the Behavioral Risk Factor Surveillance System to examine the impacts of the ACA on health care access, risky health behaviors, and self-assessed health after two years. We estimate difference-in-difference-in-differences models that exploit variation in treatment intensity from state participation in the Medicaid expansion and pre-ACA uninsured rates. Results suggest that the ACA led to sizeable improvements in access to health care in both …

The Growth Of Government, Trust In Government, And Evidence On Their Coevolution, Steven Gordon, John Garen, J. R. Clark

Institute for the Study of Free Enterprise Working Papers

The coevolution of trust in government alongside the growth of government is an aspect of the latter topic that has not been explored. Moreover, trust is viewed as part of social capital, facilitating social and economic transactions and the governance of society, and its decline has caused concern. We consider this coevolution in the context of a political economy model and a public interest view of government growth, incorporating the role of trust in government. Though a negative association of the growth in government with trust in government is broadly consistent with the historical data since the late 1950s, we …