The Impact of the Affordable Care Act: Evidence from California’s Hospital Sector

The Affordable Care Act (ACA) authorized the largest expansion of public health insurance in the U.S. since the mid-1960s. We exploit ACA-induced changes in the discontinuity in coverage at age 65 using a regression discontinuity based design to examine effects of the expansion on health insurance coverage, hospital use, and patient health. We then link these changes to effects on hospital finances. We show that a substantial share of the federally-funded Medicaid expansion substituted for existing locally-funded safety net programs. Despite this offset, the expansion produced a substantial increase in hospital revenue and profitability, with larger gains for government hospitals. On the benefits side, we do not detect significant improvements in patient health, although the expansion led to substantially greater hospital and emergency room use, and a reallocation of care from public to private and better-quality hospitals.

That is from a new NBER working paper by Mark Duggan, Atul Gupta, and Emilie Jackson.

Thursday assorted links

1. Church forests in south Gonder.

2. What is it like to live without Google?

3. Classical liberalism in Venezuela.

4. Price theory summer camp at University of Chicago.

5. The welfare effects of social media, a new paper by Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow.  (On the road, have not had a chance to read it yet.)  And the NYT summary.  My guess is this is the best paper on social media/Facebook so far.

IQ economics > behavioral economics

We use administrative and survey-based micro data to study the relationship between cognitive abilities (IQ), the formation of economic expectations, and the choices of a representative male population. Men above the median IQ (high-IQ men) display 50% lower forecast errors for inflation than other men. The inflation expectations and perceptions of high-IQ men, but not others, are positively correlated over time. High-IQ men are also less likely to round and to forecast implausible values. In terms of choice, only high-IQ men increase their propensity to consume when expecting higher inflation as the consumer Euler equation prescribes. High-IQ men are also forward-looking — they are more likely to save for retirement conditional on saving. Education levels, income, socio-economic status, and employment status, although important, do not explain the variation in expectations and choice by IQ. Our results have implications for heterogeneous-beliefs models of household consumption, saving, and investment.

That is from a new NBER working paper by Francesco D’Acunto, Daniel Hoang, Maritta Paloviita, and Michael Weber.

Me on wealth taxes from 2013

I don’t usually like to rerun material, but every now and then it seems appropriate.  Here is the opening paragraph from my NYT column from six years ago:

If you’d like to know where American political debates are headed, the data suggest a simple answer. The next major struggle — in economic terms at least — will be over whether taxes on personal wealth should rise — and by how much.

There is much more at the link.

Does “putting yourself in the shoes of others” reduce attitude change?

From Rhia Catapano, Zakary L. Tormala, and Derek D. Rucker:

Counterattitudinal-argument generation is a powerful tool for opening people up to alternative views. On the basis of decades of research, it should be especially effective when people adopt the perspective of individuals who hold alternative views. In the current research, however, we found the opposite: In three preregistered experiments (total N = 2,734), we found that taking the perspective of someone who endorses a counterattitudinal view lowers receptiveness to that view and reduces attitude change following a counterattitudinal-argument-generation task. This ironic effect can be understood through value congruence: Individuals who take the opposition’s perspective generate arguments that are incongruent with their own values, which diminishes receptiveness and attitude change. Thus, trying to “put yourself in their shoes” can ultimately undermine self-persuasion. Consistent with a value-congruence account, this backfire effect is attenuated when people take the perspective of someone who holds the counterattitudinal view yet has similar overall values.

Yes, yes the replication crisis.  Still, this may be a useful countertonic against the notion that trying to understand other people always yields high returns.  Perhaps the better approach is simply to drain yourself of values when considering the perspectives of other people.

Wednesday assorted links

My Conversation with Noel Johnson and Mark Koyama

Lots of economic history in this one, with the underlying themes of persecution and tolerance, here is the audio and video.

We talk about the evolution of anti-Semitism, how the Black Death influenced Europe, the economics and politics of volcanic eruptions, how much prejudice will come back, amateur astronomy,  Jared Diamond, cousin marriage and the origins of the West, why England was a coherent nation-state so early, the origins of the Industrial Revolution, Schindler’s List, and more.  I split the time between the two, here is one excerpt:

JOHNSON: Mark and I have done a lot of work on building datasets of Jewish persecution and Jewish expulsions at the city level and the country level in Europe over a very long period of time. And a question that I, for one, don’t fully understand is, you don’t need to actually kill all the Jews or expel them in order to extract resources from them. In fact, in some way, this is off the equilibrium path. You’re no longer in some optimal equilibrium for both the ruler and for the Jewish community.

Oftentimes, these Jewish communities would be expelled from a city, they would be invited to come back, and they would come back — in 5, 10, 15 years, sometimes even shorter. But that’s a little bit easier to understand.

In the case I gave you in England in 1290s, I think I understand a little bit about why it might have happened that way. I think it was signaling credibility in some political compact between the king and the nobles, but I’m not sure. But that’s an example of top down.

Other times, clearly, people are . . . You have, say, guilds moving against these Jewish communities. An example of this would be in 1614, when the most well-known Jewish persecution was in Frankfurt am Main. It was called the Fettmilch Massacre. Fettmilch was a baker. He was in guild, and he was upset about the terms of the political deal between the city rulers — the city council — and what the guilds were getting. One of the things that the guilds wanted were the Jews to be expelled. This was competition in some sense.

There was this bit from me:

COWEN: If the Black Death raised wages, does that mean that immigration today lowers wages?


COWEN: Large volcanic eruptions earlier in history. From an economic point of view, what’s the single most interesting thing we know about them?

JOHNSON: I think what’s very interesting about the volcanic eruptions is that we are discovering more and more that they may have played a large role in political change that occurred. Joe Manning at Yale, and I believe his graduate student (Bruce M.S. Campbell) have been doing work on . . . They looked at a series of volcanic eruptions that led to the end of the pharaonic empire. That ended around 30 or 60 BC, I forget. Right around that time.

That was an empire that lasted for 300 years, but they experienced all these crop failures. And then once you look at it, you see that in Indonesia, all these major volcanic eruptions were happening in perfect timing with these crop failures that were taking place. Actually, they can tell from looking at the Nile and how much it’s flooding and things.

COWEN: Politics becomes nastier when the volcano goes off?

And from Mark Koyama:

COWEN: Why was China, as a nation or territory, so large so early in world history?

KOYAMA: Yeah, that’s a great question. There are several potential explanations, one of which is geographic. Another one would be an argument from the writing system. But I think the geography story is quite important. Jared Diamond, building on people like Eric Jones, argued that China’s geography . . .

Essentially there are two core geographic regions in China around the Yellow and Yangtze river deltas, which produced a huge amount of grain or rice. If you control those core regions, you can raise large armies. You can have a large population and dominate the subsequent regions.

Whereas, the argument is for Europe that these core regions are, perhaps, arguably more separated by geographical boundaries. The limitation of that argument on its own is that geography is static, so it doesn’t really tell you anything about the timing.

The interesting thing about China, in my view, is not just that it was once unified, or unified early. But it’s persistently unified. It reunifies. Interestingly enough, the periods of de-unification get consistently smaller. So there are always periods where it’s fragmented, like the warlord period in the early 20th century, but over time may become smaller.

Europe doesn’t seem to have that centrifugal force, so a lot of Europe is unified by the Romans, but it’s not able to come back together along those lines later.

And the argument that I put forward in an article with Tuan-Hwee Sng and Chiu Yu Ko of National University of Singapore is that it’s not just the core geographical reason. That’s part of it. But actually, the periodic threat from a nomadic steppe is another key factor.

This is geographic because China has a very sharp slope from really productive agricultural land to land which is only fit for horses, for Eurasian steppe. China could be invaded very easily from the north by these steppe nomads, whereas Europe — it was much less vulnerable to this. And that helps to explain why the Chinese state is often a northern state.

So if I can add, if you think about China today, or even China in the past, the really productive land — a lot of it’s in the quite far south, in Shanghai, Yangtze delta. But the political center of China is near Beijing, or it’s in the north. And that’s due to this political economy threat from the steppe. And it’s these periodic steppe invasions which we argue are responsible for the centralization, an almost militarized character of the Chinese state through history.


COWEN: Max Weber. Overrated or underrated?

KOYAMA: Underrated.


KOYAMA: Because most people just know the Protestant theory, and they misreport it. Whereas, actually, his most interesting stuff is on Chinese religion and ancient Judaism. And the role of —

COWEN: The history of music, right?

There is much more at the link.  I am very happy to recommend their forthcoming book Persecution and Tolerance: The Long Road to Religious Freedom.

What I’ve been reading

1. Josh Rosenblatt, Why We Fight: One Man’s Search for Meaning Inside the Ring.  An actual conceptual phenomenology of fighting, there should be more books like this about more different topics.  Think of the model “X is actually like this.”  Recommended.

2. Alexander Hertel-Fernandez, State Capture: How Conservative Activists, Big Businesses, and Wealthy Donors Reshaped the American States — and the Nation.  A serious and scholarly book, rather than the kind of hysterical falsehoods we’ve come to expect on such topics.

3. Peter Doggett, Are You Ready for the Country? Elvis, Dylan, Parsons and the roots of country rock.  Five hundred pages of text, and consistently interesting throughout, at least if you care about the topic.  Otherwise not.  I have pre-ordered the author’s forthcoming biography of CSNY.

4. Tony Spawforth, The Story of Greece and Rome.  Highly readable and useful, not comprehensive on say the economics side but a fresh look and what we know and do not know and how the various pieces fit together.

Does Amazon have an investing advantage?

Thought experiment: How would Amazon enter the venture capital business?

Use data from AWS to inform investment decisions

Amazon can leverage its proprietary data from AWS (Amazon Web Services).  Amazon’s edge is that most of the best technology start-ups are built on its services.  Amazon has a lot of information about how much these companies are spending, what services they use, what technologies they use, and more.

The AWS data could be extremely predictive and give Amazon early signs that companies are growing fast or reaching an inflection point.  And it can use the data as a better diligence check of a company … for instance, the data could help determine which companies that claim they have “AI” are real and which are just marketing.

Using this data to invest in public companies would likely not be legal since it could be deemed as inside information.   But using it for private companies is something Amazon could do.

There is much more at the link from Auren Hoffman.

You still underestimate YouTube

Birmingham was brought to a standstill on Saturday, with motorists abandoning cars and the city gridlocked for hours after thousands of teenagers flooded the city centre to see a 19-year-old YouTuber make a 30-second public appearance at a cosmetics store.

Many shoppers were forced to cancel their trips, while parts of the bus network ground to a halt and road traffic was at a standstill, as fans hoped to catch a glimpse of James Charles, who is known for his online makeup guides.

Here is the full story, via Anecdotal.

Craig Palsson does economics on YouTube — Market Power

His channel is Market Power, and he promises new economics videos every Tuesday.  Here is the associated Twitter account for the channel.  Here is his video “How much does vibranium cost in the Marvel movies?”:

Here is another video “How much is an Oscar nomination worth?

And I am pleased to announce that Craig is a newly minted Emergent Ventures fellow.  He also is an economic historian, and has lived for two years in Haiti, both big pluses in my view.

Philanthropic hospital markets in everything

Nonprofit hospitals across the United States are seeking donations from the people who rely on them most: their patients.

Many hospitals conduct nightly wealth screenings — using software that culls public data such as property records, contributions to political campaigns and other charities — to gauge which patients are most likely to be the source of large donations.

Those who seem promising targets for fund-raising may receive a visit from a hospital executive in their rooms, as well as extra amenities like a bathrobe or a nicer waiting area for their families.

Some hospitals train doctors and nurses to identify patients who have expressed gratitude for their care, and then put the patients in touch with staff fund-raisers.

…it could make patients worry that their care might be affected by whether they made a donation.

Despite such concerns, these practices are becoming commonplace, particularly among the largest nonprofit hospitals. A 2016 survey of 108 hospitals found that 68 had grateful patient programs, according to the Advisory Board, a consulting firm.

Here is more from Phil Galewitz at the NYT.

The population explosion in the global South

Vegard Skirbekk shows that many of those who were part of Europe’s population explosion died before reaching childbearing age, which is not true in the developing world.  This means the European boom had a smaller impact on global population.  Take one of Skirbekk’s comparisons, Denmark and Guatemala.  In 1775, prior to the onset of its transition, Denmark had a population of 1 million and a population density of about twenty people per square kilometre.  In Guatemala in 1900, these numbers were about the same.  Because Denmark’s population boomed earlier, just two to three children per woman survived to adulthood during its transition.  By the time Denmark’s total fertility rate fell below 2.1 in the 1950s, its population had expanded to 5 million.  By contrast, Guatemala’s transition only began in 1900.  By the 1990s, the average Guatemalan woman was giving birth to five children who survived to childbearing age.  Today there are 15.5 million Guatemalans.  When Guatemala’s transition is complete, it is projected to have a population of about 24 million.  Its transition will have produced a population expansion five times that of Denmark.  Multiplied across many countries, this explains why the West’s share of world population dropped so rapidly after 1950.

That is all from Eric Kaufmann’s excellent Whiteshift: Populism, Immigration, and the Future of White Majorities.

Monday assorted links

1. Auren Hoffman on VC and private equity.

2. “Cambridge creative-arts students have a-level scores close to those of economics students at Warwick, but earn about half as much. That is tantamount to giving up an annuity worth £500,000.” (The Economist)

3. Who again in NATO is supposed to fight back?

4. Singapore weighs the fate of its brutalist buildings (NYT).

5. The touchie-feelies.

6. Holocaust survivors lived longer.

7. The wisdoms of Eli Dourado how to boost long-term growth.