There is increasing interest in expanding Medicare health insurance coverage in the U.S., but it is not clear whether the current program is the right foundation on which to build. Traditional Medicare covers a uniform set of benefits for all income groups and provides more generous access to providers and new treatments than public programs in other developed countries. We develop an economic framework to assess the efficiency and equity tradeoffs involved with reforming this generous, uniform structure.We argue that three major shifts make a uniform design less efficient today than when Medicare began in 1965. First, rising income inequality makes it more difficult to design a single plan that serves the needs of both higher- and lower-income people. Second, the dramatic expansion of expensive medical technology means that a generous program increasingly crowds out other public programs valued by the poor and middle class. Finally, as medical spending rises, the tax-financing of the system creates mounting economic costs and increasingly untenable policy constraints. These forces motivate reforms that shift towards a more basic public benefit that individuals can “top-up” with private spending.If combined with an increase in other progressive transfers, such a reform could improve efficiency and reduce public spending while benefiting low income populations.
That is from a new NBER working paper by Mark Shepard, Katherine Baicker, and Jonathan S. Skinner.
Video, audio, and transcript here, part of Mark’s personal challenge for the year, an excellent event all around. This will also end up as part of CWT.
When it comes to crime, economists focus on deterrence. Deterrence works but it’s not the only thing that works. Simple things like better street lighting can reduce crime as can high-quality early education or psychological interventions such as cognitive behavioral therapy. The sociological literature has emphasized that crime is about preferences as well as constraints. Life-events or turning points such as marriage and childbirth, for example, can greatly change crime preferences. The sociological literature is mostly from case studies but in an excellent new paper, Family Formation and Crime, Maxim Massenkoff and Evan Rose (both on the job market from Berkeley) demonstrate these insights in a huge dataset.
A big part of what makes their paper compelling is that almost all of the results are blindingly clear in the raw data or using simple analysis. Here, for example, is the crime rate for women (drug, DUI, economic, or property destruction crimes) in the years before pregnancy, during pregnancy (between the red dotted lines) and after birth. Crime rates fall dramatically with pregnancy and in the three years after birth they are 50% lower on average than in the years before pregnancy.
Pregnancy imposes some physical limits on women but the effects are also very large for men whose crime rates fall by 25-30% during pregnancy of their partner and continue at that lower rate for years afterwards. Keep in mind that in our paper on three strikes, Helland and I found that the prospect of an additional twenty years to life (!) reduce criminal recidivism by just ~17%, so the effect of pregnancy is astoundingly large.
It’s not obvious what the policy implications are. Have children at a younger age doesn’t sound quite right, although in an analysis on teen births Massenkoff and Rose do indeed show that whatever the costs of teen pregnancy there are some offsetting benefits in reduced crime of the parents. More generally, however, there are policy implication if we think beyond the immediate results. First, these results show that crime isn’t simply a product of family background, poverty and neglect. Crime is a choice.
In Doing the Best I Can: Fatherhood in the Inner City, Edin and Nelson relay the following anecdote (quoted in Massenkoff and Rose):
Upon hearing the news that the woman they are “with” is expecting, men such as Byron are suddenly transformed. This part-time cab driver and sometime weed dealer almost immediately secured a city job in the sanitation department (p. 36).
Byron chose to change and he did so based on the rational expectation of a future event. Massnekoff’s and Rose show that these choices are common.
Instead of thinking of these results as being about pregnancy and marriage we should ask what is it about pregnancy and marriage that makes people reduce crime? Love, responsibility and long-run thinking are all at play. In economic terms, pregnancy reduces discount rates and gives men and women a reason to invest in human capital and work for the future. Children and marriage play a large role in socializing and “civilizing” both men and women but they surely can’t be the only such factors. Indeed, although men and women on average reduce their crime rates dramatically on pregnancy this is mostly coming from men and women who had high rates to begin with–there are plenty of men and women who don’t much reduce their crime rates on pregnancy because they were already low–in a way, these men and women were pre-socialized so how do we extend the benefits of pregnancy to the expectation of pregnancy or how can we widen the effect to other factors that can also civilize?
That is the topic of my latest Bloomberg column, here is one excerpt:
Or imagine how art markets might be affected by a wealth tax. Rather than keeping their art collections private, many more billionaires would donate that art to museums and other nonprofits. This appears to be a good outcome. But it would exacerbate one of the art world’s worst problems, which is inflated appraisals for tax purposes. At any rate, America’s museums do not have the space or resources to display and look after all of these paintings and sculptures; it is already common for a museum to display no more than 5% or 10% of its collection.
Essentially, a lot of art would be removed from circulation, stored in warehouses largely for tax reasons. Along the way, Christie’s and Sotheby’s might go bankrupt, as well as many art galleries, as the demand to buy art would plummet. You may think that the demise of a few galleries and auction houses is a small price to pay to reduce wealth inequality. But consider that artists, too, need to make a living…
The U.S. has created the most dynamic and effective nonprofit sector in the world. It rests on a delicate balance of private support and some indirect (not too much) government subsidy. America interferes with that balance at its peril.
There is much more at the link.
Here is the audio and transcript, this was one of the “most different” Conversations with Tyler and also one of the most interesting. Here is part of the summary introduction:
Shaka joined Tyler to discuss his book Writing My Wrongs: Life, Death, and Redemption in an American Prison, what it was like to return to society not knowing the difference between the internet and a Word document, entrepreneurialism and humor in prison, the unexpected challenges formerly incarcerated people face upon release, his ideas for helping Detroit, what he connects with in Eastern philosophy, how he’s celebrating the upcoming anniversary of his tenth year of freedom, and more.
Here is one excerpt:
SENGHOR: Early, when I first went to prison, you can get all types of books. As I got deeper into my prison sentence, they started banning a lot of those books. Malcolm’s book is probably one of the most popular books in prison because it’s, to me, the one book about personal transformation that just permeates that environment. And it doesn’t matter whether you’re black, white, Native American, whatever. It’s something about his redemptive story that just resonates with people who are incarcerated.
Oftentimes, we exchanged books with each other, and we would buy books. I would order books from different outlets that sold books to men and women in prison. The prison library — it varies from prison to prison. Some are better than others.
Back in the day, you used to get books donated by people. They will have estates, and they would just say, “Hey, let’s donate these to the local prison.” But now it’s becoming more and more restrictive in terms of what you can read, specifically around books that reflect black culture, which was really something that was shocking to me.
A lot of those books I read in the early stages of my incarceration are now banned. You can’t get Donald Goines books the way that you used to. Their excuse is that it talks about crime and things like that. But I’m like, “You can’t get that, but you can get Stephen King, which is murder and mayhem.”
COWEN: Can you get Shakespeare? That’s also murder and mayhem.
SENGHOR: Yeah, murder and mayhem. Yeah, you can definitely get all the Shakespearean classics and things like that. This just reflects the contradictions in larger society.
COWEN: I think you were seven years total in solitary, in one period of four years running. Toward the end of that four-year period, did you feel like you were going crazy? Or did you have some greater, stoic sense of calm?
COWEN: The individuals who are incarcerated — what are their senses of humor like? Is it different on the inside or just the same? Are they funnier?
SENGHOR: It is probably one of the most fascinating, quick-witted spaces you can imagine. I did an interview some years back with Trevor Noah, and I remember telling him like, “Prison is hilarious.” And he was like, “No, no, no. That doesn’t seem like quite a good narrative.” [laughs] But what I would always explain to people is that you can’t survive that environment without the ability to laugh at the absurdity of it, the ability to laugh at the craziness of it, the creativity of it.
And you have some brilliant, brilliant comedians in that environment. There’s actually a comedian who’s free now, Ali Siddiq, who’s just an incredible storyteller, and he’s a great comedian. And that talent is abundant in that environment. Guys crack jokes all the time. The officers crack jokes. It’s one of the things that is universal — laughter — and you need that in order to survive hardship.
My favorite part of the dialogue starts with this:
COWEN: It seems to me, from my great distance, that a lot of men in prison have women on the outside who are very strongly attracted to them. How do you think about that? Why do you think there’s a special attraction to men in prison?
His answer was excellent, but too long to reproduce here.
A recent study of opioid-related deaths in Massachusetts underlines this crucial point, finding that prescription analgesics were detected without heroin or fentanyl in less than 17 percent of the cases. Furthermore, decedents had prescriptions for the opioids that showed up in toxicology tests just 1.3 percent of the time.
Alexander Walley, an associate professor of medicine at Boston University, and five other researchers looked at nearly 3,000 opioid-related deaths with complete toxicology reports from 2013 through 2015. “In Massachusetts, prescribed opioids do not appear to be the major proximal cause of opioid-related overdose deaths,” Walley et al. write in the journal Public Health Reports. “Prescription opioids were detected in postmortem toxicology reports of fewer than half of the decedents; when opioids were prescribed at the time of death, they were commonly not detected in postmortem toxicology reports….The major proximal contributors to opioid-related overdose deaths in Massachusetts during the study period were illicitly made fentanyl and heroin.”
The study confirms that the link between opioid prescriptions and opioid-related deaths is far less straightforward than it is usually portrayed. “Commonly the medication that people are prescribed is not the one that’s present when they die,” Walley told Pain News Network. “And vice versa: The people who died with a prescription opioid like oxycodone in their toxicology screen often don’t have a prescription for it.”
Paul Ohm, a former prosecutor in the Justice Department’s computer crime and intellectual property section, said the laws governing child sexual abuse imagery were among the “fiercest criminal laws” on the books.
“Just the simple act of shipping the images from one A.I. researcher to another is going to implicate you in all kinds of federal crimes,” he said.
If the late Ronald Coase could be called upon to advise the Delhi government, he would persuade chief minister Arvind Kejriwal to pay farmers in Punjab and Haryana to stop burning crop residue.
In recent times, air quality in Delhi has remained poor throughout the year for various reasons, including the rapid loss of green cover, construction of homes and infrastructure projects, and vehicular as well as industrial pollution. But for a few weeks every November, it gets almost impossible to breathe. The last straw has been the crop residue burning (CRB) by farmers in Punjab and Haryana, which causes a heavy smog to settle over Delhi…
The good news is that these [health] costs—avoidable by Delhi residents if CRB were eliminated—are about 10 times the cost that would be incurred by farmers in adopting substitutes to crop burning. Where policymakers see costs, Coase saw potential for gains from trade.
Here is more from Shruti Rajagopalan.
The racial integration of the US Army during the Korean War (1950-1953) is one of the largest and swiftest desegregation episodes in American history. This paper argues that racial integration improved white survival rates at the expense of blacks, and resulted in less anti-black prejudice among white veterans decades after the war. Using a novel military casualty file, I construct a wartime similarity index to measure the extent of racial integration across military units and time. Using exogenous changes in racial integration, I show that integrated whites were 3% more likely to survive their injuries than segregated whites, whereas integrated blacks were 2% were less likely to survive their injuries than segregated blacks. Given that blacks were initially confined to noncombat support roles, the results reflect a convergence in hazardous combat assignments. To explore the long-term effects of racial integration, I link individual soldiers to post-war social security and cemetery data using an unsupervised learning algorithm. With these matched samples, I show that a standard deviation change in the wartime racial integration caused white veterans to live in more racially diverse neighborhoods and marry non-white spouses. In aggregate, these results are some of the first and only examples of large-scale interracial contact reducing prejudice on a long-term basis.
That is from the job market paper from Daniel Indacochea of the University of Toronto.
I had never thought of this before:
This paper, using a novel data set on rent stabilization in New York City, takes a first step in investigating the policy’s unintended consequences on tenant labor market outcomes, while also exploring the impact of policy awareness on those outcomes. Recognizing the potential endogeneity of living in a rent-stabilized unit, this paper uses three decades of housing vacancy data to construct an instrumental variable leveraging variation in the availability of rent-stabilized units across New York boroughs over time. The sorted effects method in Chernozhukov, Fern´andez-Val, and Luo (2018) is also applied to investigate heterogeneous effects beyond their averages. The main results demonstrate that rent-stabilized tenants are more likely to be unemployed compared with tenants in private market-rate units. These effects are particularly salient among white and high-skilled tenants.
That is from the job market paper of Hanchen Jiang of Johns Hopkins University.
The child labor activist, who works for Indian NGO Bachpan Bachao Andolan, had launched a pilot program 15 months prior to match a police database containing photos of all of India’s missing children with another one comprising shots of all the minors living in the country’s child care institutions.
He had just found out the results. “We were able to match 10,561 missing children with those living in institutions,” he told CNN. “They are currently in the process of being reunited with their families.” Most of them were victims of trafficking, forced to work in the fields, in garment factories or in brothels, according to Ribhu.
This momentous undertaking was made possible by facial recognition technology provided by New Delhi’s police. “There are over 300,000 missing children in India and over 100,000 living in institutions,” he explained. “We couldn’t possibly have matched them all manually.”
Locating thousands of missing children is just one of the challenges faced by India’s overstretched police force in a nation of 1.37 billion people.
In spite of these practical benefits, I still do not favor facial recognition systems at the macro level. India seems to be planning a big one:
…India’s government now has a much more ambitious plan. It wants to construct one of the world’s largest facial recognition systems. The project envisions a future in which police from across the country’s 29 states and seven union territories would have access to a single, centralized database.
Here is the full article with much more detail about the plans.
Shachihata, a company that sells personal seals, has developed a stamp that allows victims to mark their attackers with invisible ink, which can be detected under ultraviolet light. A trial run of 500 anti-groping stamps, priced at ¥2,500 ($23), sold out within 30 minutes.
Here is more from The Economist, via Hugo.
We show that Harvard encourages applications from many students who effectively have no chance of being admitted, and that this is particularly true for African Americans.
Here is the whole abstract, by Peter Arcidiacono, Josh Kinsler, and Tyler Ransom:
Over the past 20 years, elite colleges in the US have seen dramatic increases in applications. We provide context for part of this trend using detailed data on Harvard University that was unsealed as part of the SFFA v. Harvard lawsuit. We show that Harvard encourages applications from many students who effectively have no chance of being admitted, and that this is particularly true for African Americans. African American applications soared beginning with the Class of 2009, with the increase driven by those with lower SAT scores. Yet there was little change in the share of admits who were African American. We show that this change in applicant behavior resulted in substantial convergence in the overall admissions rates across races yet no change in the large cross-race differences in admissions rates for high-SAT applicants.
And from the paper’s conclusion:
If the goal of recruiting African Americans is not simply to increase the diversity of matriculants, but also to achieve racial balance in the admit pool and/or racial balance in admit rates, then the policy could be deemed a success. As an example, admit rates for African American applicants were twice as large as admit rates for Asian American applicants in 2000, but by 2017 were approximately the same. Why Harvard might careabout the racial distribution of admit rates and applicants is not obvious. What is clear is that each year there are a significant number of African American high school students who have a potentially false impression about their chances of being admitted to Harvard.
In the United States, elected district attorneys’ offices prosecute over 85% of all felony cases, but we know little about their effect on local criminal justice outcomes. Using a newly-collected dataset of district attorney elections, I show that Republican district attorneys lead to a 18-21% increase in new prison admissions in the two years following their election, while nonwhite district attorneys lead to a 10% decline. In both cases, there are no significant effects on local crime or arrest rates. These results show that the identity of the local district attorney is an important determinant of incarceration rates.
Here is the paper, by Sam Krumholz, on the job market this year from UCSD, that is not his job market paper, here is his full portfolio, public economics and law and economics, to me one of the more interesting candidates this year.