Economics Commons^™

Why Relative Economic Position Does Not Matter: A Cost Benenit Analysis, Thomas J. Kniesner, W. Kip Viscusi

Center for Policy Research

The current debate over cost-benefit concerns in agencies’ evaluations of government regulations is not so much whether to consider costs and benefits at all but rather what belongs in the estimated costs and benefits. Overlaid is the long-standing belief that the distribution of costs and benefits needs some consideration in policy evaluations. In a recent article in the University of Chicago Law Review, Robert Frank and Cass Sunstein proposed a relatively simple method for adding distributional concerns to policy evaluation that enlarges the typically constructed estimates of the individual’s willingness to pay for safer jobs or safer products. One might …

Health Insurance Coverage And The Disability Insurance Application Decision, Jonathan Gruber, Jeffrey D. Kubik

Economics - All Scholarship

We investigate the effect of health insurance coverage on the decision of individuals to apply for Disability Insurance (DI). Those who qualify for DI receive public insurance under Medicare, but only after a two-year waiting period. This raises concerns that many disabled are going uninsured while they wait for their Medicare coverage. Moreover, the combination of this waiting period and the uncertainty about application acceptance may deter those with health insurance on their jobs, but no alternative source of coverage, from leaving work to apply for DI.

Data from the Health and Retirement Survey show that, in fact, uninsurance does …

Lethal Elections: Gubernatorial Politics And The Timing Of Executions, Jeffrey D. Kubik, John R. Moran

Economics - All Scholarship

We document the existence of a gubernatorial election cycle in state executions, suggesting that election year political considerations play a role in determining the timing of executions. Our analysis indicates that states are approximately 25 percent more likely to conduct executions in gubernatorial election years than in other years. We also find that elections have a larger effect on the probability that an African American defendant will be executed in a given year than on the probability that a white defendant will be executed, and that the overall effect of elections is largest in the South. These findings raise concerns …

Can Policy Changes Be Treated As Natural Experiments? Evidence From State Excise Taxes, Jeffrey D. Kubik, John R. Moran

Economics - All Scholarship

An important issue in public policy analysis is the potential endogeneity of the policies under study. If policy changes constitute responses on the part of political decision-makers to changes in a variable of interest, then standard analyses that treat policy changes as natural experiments may yield biased estimates of the impact of the policy (Besley and Case 2000). We examine the extent to which such political endogeneity biases conventional fixed effects estimates of behavioral parameters by identifying the elasticities of demand for cigarettes and beer using the timing of state legislative elections as an instrument for changes in state excise …

Confidence Statements For Efficiency Estimates From Stochastic Frontier Models, William C. Horrace, Peter Schmidt

Economics - All Scholarship

This paper is an empirical study of the uncertainty associated with technical efficiency estimates from stochastic frontier models. We show how to construct confidence intervals for estimates of technical efficiency levels under different sets of assumptions ranging from the very strong to the relatively weak. We demonstrate empirically how the degree of uncertainty associated with these estimates relates to the strength of the assumptions made and to various features of the data.

April 2002, Syracuse Department Of Economics

Economics - All Scholarship

No abstract provided.

Cost-Benefit Analysis: Why Relative Economic Position Does Not Matter, Thomas J. Kniesner, W. Kip Viscusi

Economics - All Scholarship

The current debate over cost-benefit concerns in agencies' evaluations of government regulations is not so much whether to consider costs and benefits at all but rather what belongs in the estimated costs and benefits themselves. Overlaid is the long-standing concern that the distribution of costs and benefits needs some consideration in policy evaluations. In a recent article in the University of Chicago Law Review, Robert Frank and Cass Sunstein proposed a relatively simple method for adding distributional concerns to policy evaluation that enlarges the typically constructed estimates of the individual's willingness to pay for safer jobs or safer products. One …

On The Edge Of Scarcity: Environment, Resources, Population, Sustainability, And Conflict, Michael N. Dobkowski, Isidor Wallimann

Program for the Advancement of Research on Conflict and Collaboration

These essays address one of the most pressing and significant issues that humanity has confronted to date - the lack of life-sustaining resources. Michael N. Dobkowski and Isidor Wallimann establish a disturbing but realistic scenario of the disastrous future that awaits humankind as surplus populations collide with dwindling resources. Authors consider a number of cause-and-effect situations on industrialization, biophysical limits, exponential population growth, and genocide, to name a few. This volume is a critical contribution to the field and will serve as an ideal introduction to courses in the environment, population, resources, genocide, and social conflict.

Globalization, Inequality, And The Rich Countries Of The G-20: Evidence From The Luxembourg Income Study (Lis), Timothy M. Smeeding

Center for Policy Research

The purpose of this study is to summarize and comment upon what we know about the determinants of both the level and trend in economic inequality over the past two decades, and to relate these findings to the progress of globalization in these nations. While the fruits of economic progress in rich nations have not been equally spread, we argue that most citizens enrich Organization for Economic Cooperation and Development (OECD) nations have benefited from the trend toward global economic progress. We begin with a summary of the differences in overall economic inequality within the G-20 nations based on LIS …

Contracting With Limited Commitment: Evidence From Employment-Based Health Insurance Contracts, Keith J. Crocker, John R. Moran

Center for Policy Research

When an individual's health status is observable, but evolving over time, the key to maintaining a successful health insurance arrangement is to have the healthier members of the group cross-subsidize those who experience adverse health outcomes. We argue that impediments to worker mobility may serve to mitigate the attrition of healthy individuals from employer-sponsored insurance pools, thereby creating a de facto commitment mechanism that allows for more complete insurance of health risks than would be possible in the absence of such frictions. Using data on health insurance contracts obtained from the 1987 National Medical Expenditure Survey, we find that the …

November 2001, Syracuse Department Of Economics

Economics - All Scholarship

No abstract provided.

Explicit Versus Implicit Income, Thomas J. Kniesner, James P. Ziliak

Center for Policy Research

By supplementing income explicitly through payments or implicitly through taxes collected, income-based taxes and transfers make disposable income less variable. Because disposable income determines consumption, policies that smooth disposable income also create welfare improving consumption insurance. With data from the Panel Study of Income Dynamics we find that annual consumption variation is reduced by almost 20 percent due to explicit and implicit income smoothing. Consumption insurance is as important economically as private health or automobile insurance. Although taxes have become an increasingly important source of consumption insurance, the 2001 income-tax reform legislation should have little effect on implicit consumption insurance.

Social Interaction And Stock Market Participation, Jeffrey D. Kubik, Harrison Hong, Jeremy C. Stein

Economics - All Scholarship

We investigate the idea that stock-market participation is influenced by social interaction. We build a simple model in which any given "social" investor finds it more attractive to invest in the market when the participation rate among his peers is higher. The model predicts higher participation rates among social investors than among "non-socials". It also admits the possibility of multiple social equilibria. We then test the theory using data from the Health and Retirement Study. Social households-defined as those who interact with their neighbors, or who attend church-are indeed substantially more likely to invest in the stock market than non-social …

Have 401(K)S Raised Household Savings? Evidence From The Health And Retirement Study, Gary V. Engelhart

Center for Policy Research

The most popular tax subsidy to household saving in the United States is the 401(k)-type pension arrangement, which subsidizes saving through income-tax deferral on wages and salary dedicated to retirement saving and through investment accrual at the pre-tax interest rate. Although enabled by legislation in 1978, 401(k) plans effectively were not adopted until the Internal Revenue Service issued clarifying rules in 1981. Since then, they have grown remarkably and become the primary vehicle for retirement saving. In 1996, 33 percent of all private pension assets, 33 percent of all pension plans, and 45 percent of all active pension participants were …

Pre-Retirement Lump-Sum Pension Distributions And Retirement Income Security: Evidence From The Health And Retirement Study, Gary V. Engelhart

Center for Policy Research

This paper uses data from the 1992 and 1998 Waves of the Health and Retirement Study (HRS) to examine the extent of retirement wealth erosion from pre-retirement lump-sum distributions. There is little evidence that spent distributions have resulted in significant pension leakage. If spent distributions had been rolled over into a tax-qualified plan instead, they would have represented in present value between 5 and 11 percent of pension and Social Security wealth for the median household that spent a distribution. However, one-quarter of the households that spent distributions—which is 2.25 percent of all households age 51 to 61—could have increased …

Slippery When Wet: The Effects Of Local Alcohol Access Laws On Highway Safety, Reagan Anne Baughman, Michael Conlin, Stacy Dickert-Conlin, John V. Pepper

Economics - All Scholarship

Using detailed panel data on local alcohol policy changes in Texas, this paper tests whether the effect of these changes on alcohol-related accidents depends on whether the policy change involves where the alcohol is consumed and the type of alcohol consumed. After controlling for both county and year fixed effects, we find evidence that: (i) the sale of beer and wine may actually decrease expected accidents; and (ii) the sale of higher alcohol-content liquor may present greater risk to highway safety than the sale of just beer and wine.

April 2001, Syracuse Department Of Economics

Economics - All Scholarship

No abstract provided.

Intergenerational Labor Market And Welfare Consequences Of Poor Health, Thomas J. Kniesner, Anthony T. Losasso

Center for Policy Research

Our research provides new econometric evidence concerning partial economic risk sharing between a frail elderly parent and an adult child. We estimate a jointly determined limited dependent variables system explaining the parent’s entry into a nursing home, the adult child’s visits to the parent, and the adult child’s labor supplied. The time allocation of adult sons is unaffected by a parent’s frail health. Adult daughters who visit a frail elderly parent daily decrease their annual labor supplied by about 1,000 hours annually, largely through labor force non-participation. The implied welfare loss to the daughter from a frail elderly parent in …

Intergenerational Labor Market And Welfare Consequences Of Poor Health, Thomas J. Kniesner, Anthony T. Losasso

Center for Policy Research

Our research provides new econometric evidence concerning partial economic risk sharing between a frail elderly parent and an adult child. We estimate a jointly determined limited dependent variables system explaining the parent’s entry into a nursing home, the adult child’s visits to the parent, and the adult child’s labor supplied. The time allocation of adult sons is unaffected by a parent’s frail health. Adult daughters who visit a frail elderly parent daily decrease their annual labor supplied by about 1,000 hours annually, largely through labor force non-participation. The implied welfare loss to the daughter from a frail elderly parent in …

Unfinished Business: Inadequate Health Coverage For Privately Insured, Seriously Ill Children, Nancy Swigonski, Eleanor D. Kinney, Deborah A. Freund, Thomas J. Kniesner

Center for Policy Research

During the 1980s and 1990s there were great increases of health insurance coverage for poor children through the Children’s Health Insurance Program (CHIP) and extended Medicaid eligibility. Problems remain for the small number of children with serious medical conditions whose care is a high proportion of total health care expenditures on children. We report on the adequacy of health insurance coverage for a sample of children with serious and rare illnesses treated at the single tertiary care pediatric hospital in Indiana. One-third of privately insured children in our data had inadequate insurance. Compared to families with inadequate health insurance families …

Determinants Of Medical Costs Following A Diagnosis Of Depression, Regina H. Powers, Thomas J. Kniesner, Thomas W. Croghan

Center for Policy Research

Objective: Assess the determinants of medical costs for depressed individuals.

Method: Using medical insurance claims for a population of depressed individuals with employer provided insurance, we estimated multivariate models of the costs for general medical care, exclusive of costs for mental health services, following diagnosis. Explanatory variables included provider choice (psychiatrist or non-physician mental health specialist), treatment choice (medication, psychotherapy, or combination treatment); treatment adequacy as defined by APA guidelines; characteristics of depression symptoms and severity; and other demographic characteristics.

Results: On average, there were increases in the costs for general medical services in the year following diagnosis of a …

The Role Of Microsimulation In Longitudinal Data Analysis, Douglas A. Wolf

Center for Policy Research

The term “microsimulation” has been linked to a range of tools and techniques that are finding growing use in empirical social science applications. This paper considers one such area, namely the potential for microsimulation to serve the needs of the data analyst, in contrast to the more common use of microsimulation by the model user. Furthermore, the focus is on longitudinal rather than cross-sectional data analysis. The paper identifies several types of longitudinal data modeling approaches in which microsimulation is particularly relevant, suggesting algorithms with which to conduct such microsimulations. Microsimulation can be used to extend the range of inferences …

Tax Reform And Automatic Stabilization, Thomas J. Kniesner, James P. Ziliak

Economics - All Scholarship

A fundamental property of a progressive income tax is that it provides implicit insurance against shocks to income by dampening the variability of disposable income and consumption. The Economic Recovery Tax Act of 1981 (ERTA) in combination with the Tax Reform Act of 1986 (TRA86) greatly reduced the number of marginal tax brackets and the maximum marginal rate, which limits the stabilizing effect of the tax system on household consumption when pre-tax income fluctuates. We examine the effect of the federal income tax reforms of the 1980s on the associated degree of automatic stabilization of consumption. The empirical framework derives …

Nominal Loss Aversion, Housing Equity Constraints, And Household Mobility: Evidence From The United States, Gary Engelhardt

Center for Policy Research

This paper exploits the significant recent variation in United States house prices to empirically examine the effect on housing equity constraints and nominal loss aversion on household mobility. The analysis uses unique, detailed data from 1985-1996 on household characteristics, mobility, and wealth from the National Longitudinal Survey of Youth (NLSY79) matched with house price data from 149 metropolitan areas to estimate semiparametric proportional hazard models of intra- and inter-metropolitan mobility. There are five principal findings: (1) household intra-metropolitan own-to-own mobility responds differently to nominal housing losses than to gains; (2) nominal loss aversion is significantly less pronounced in intra-metropolitan own-to-rent …

Private Philanthropy And The Economics Of Public Radio, Arthur C. Brooks

Center for Policy Research

Public radio in the United States receives both direct and indirect government funding. Direct subsidies come in the form of lump-sum and matching grants, while indirect subsidies proceed from tax revenues foregone on deductible private donations. Each of these sources of government money impacts charitable giving to public radio. This paper estimates both of these effects, using data on a national sample of public radio stations in the United States from 1990-96. I find that public funding to stations has a positive impact on private giving, but this impact rapidly decreases as the level of government subsidies increases, ultimately becoming …

Geography, Industrial Organization, And Agglomeration Heteroskedasticity Models With Estimates Of The Variances Of Foreign Exchange Rates, Chihwa Kao

Center for Policy Research

This paper proposes a robust estimation procedure, the bounded influence estimate (BIS), which is robust against departure from the conditional normality of the autoregressive conditional heteroskedasticity (ARCH) models to describe the behavior of exchange rates. First, the BIE identifies the additive outliers (AO, e.g., Fox 1972) caused by abnormal information arrivals which may be triggered by changes in domestic policies and international shocks. Identification of outliers allows us to analyze the major economic and political factors that contribute directly to the dramatic changes in exchange rates. Second, the performance of the BIE is compared with the maximum likelihood estimate (MLE) …

Antidepressent Treatment For Depression: Total Charges And Therapy Duration, Deborah G. Dobrez, Catherine A. Melfi, Thomas W. Croghan, Thomas J. Kniesner, Robert L. Obenchain

Center for Policy Research

Background: The economic costs of depression are significant, both the direct medical costs of care and the indirect costs of lost productivity. Empirical studies of antidepressant costeffectiveness suggest that the use of selective serotonin reuptake inhibitors (SSRI) may be no more costly than tricyclic antidepressants (TCA), will improve tolerability, and is associated with longer therapy duration. However the success of depression care usually involves multiple factors, including source of care, type of care, and patient characteristics, in addition to drug choice. The cost-effective mix of antidepressant therapy components is unclear.

Aims of the Study: Our study evaluates cost and antidepressant-continuity …

November 2000, Syracuse Department Of Economics

Economics - All Scholarship

No abstract provided.

Workplace Safety Policy: Past, Present, And Future, Thomas J. Kniesner, John D. Leeth

Economics - All Scholarship

With an annual budget of about $400 million, the Occupational Safety and Health Administration (OSHA) is about 5 percent the size of the Environmental Protection Agency, another federal agency created by President Richard M. Nixon in 1970, the "Year of the Environment." Nearly all workers in the United States come under OSHA's juridction, with some notable exceptions, including miners, transportation workers, many public employees, and people who are self-employed. OSHA is currently responsible for ptoecting over 100 million workers at 6 million work sites with the help of only about 2,000 workplace health and safety inspectors. Nevertheless, suppoers of OSHA …

Quality Of The Business Environment Versus Quality Of Life In A Dynamic Model Of Urban Composition And Growth Do Firms And Households Like The Same Cities?, Stuart S. Rosenthal, Stuart A. Gabriel

Economics - All Scholarship

Appropriately constructed measures of the quality of life and the quality of the business environment should be important determinants of the growth and composition of population across urban areas. This paper examines that question by extending theoretical measures of household quality of life to construct the first ever measure of the quality of the business environment? the value that firms place on the basket of amenities in a metropolitan area. An annual panel of quality of life and quality of business environment values for 37 cities in the United States is then constructed for the 1977 to 1995 period.

A …