Category: Law

Medicare for all is not entirely efficient

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.

My Conversation with Mark Zuckerberg and Patrick Collison

Facebook tweets:.

@patrickc, CEO of Stripe, and @tylercowen, economist at George Mason University, sit down with our CEO, Mark Zuckerberg to discuss how to accelerate progress.

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.

More Pregnancy, Less Crime

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?

The wealth tax and non-profits


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.

On fentanyl, from the comments

I always find it helpful to recall that the US was the not the first country to be hit by fentanyl. Estonia, for instance, had a massive wave of fentanyl deaths that started before the US, without all the US prescription opioid consumption, and peaked sooner. Currently, their opioid supply has moved beyond fentanyl to derivatives that are even less safe.

It seems to me that the problem was not overprescription per se. Rather, as in Estonia, there seems to be spiral where opioids are seen as acceptable drugs of abuse (entering into the space of marijuana, alcohol, tobacco, and ecstasy), illicit suppliers elect to increase the addictiveness and potency of their drugs, and we end up with much more deadly drugs.

The biggest problem US docs created was removing the social stigma against opioid use and abuse. We created a perception that being addicted to opioids was no big deal, mostly safe, and something that people could do without losing all their social standing.

Does decriminalization work? Nowhere near as well as cultural barriers. Portugal, for instance, has safe injection and all the rest, yet it is experiencing a new wave of heroin use as old addicts return to heroin thanks a weakened economy. And lest we forget the difference in price for legitimate opioids and heroin/fentanyl is not all that high. Legitimate heroin supplies are going to cost at least as much as black market opioids so I suspect we will still have a lot of users who end up on fentanyl derivatives (for which there are no safe prescribing guidelines, nor even data for simple things like LD-50).

As with most major problems, the cause and solution are likely to be social. Historically, these sorts of epidemics die down as people die and the younger users decide to not try the things that killed all their older peers. Quite possibly all our “harm reduction” strategies and treatments will delay this process and leave more people dead; a first pass analysis of mass naloxone treatment suggested that it was associated with difference in difference increase in the opioid death rate due to increased use.

Unfortunately, I see no way out of the current situation that does not risk leaving many, possibly more than current rates, people dying.

That is from a commentator named Sure.

My podcast with Shaka Senghor



Here is one excerpt:












My favorite part of the dialogue starts with this:


His answer was excellent, but too long to reproduce here.

Opioid deaths are not mainly about prescription opioids

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.”

That is by Jacob Sullum at Reason, via Arnold Kling.

Imperfect optimization

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.

Here is more from Dance and Keller at the NYT.

A Coasean solution for New Delhi?

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 Korean War

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.

Rent control is also not great for labor market outcomes

I had never thought of this before:



Facial recognition isn’t just about China and airports




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.

Harvard sentences to ponder


Here is the whole abstract, by Peter Arcidiacono, Josh Kinsler, and Tyler Ransom:


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.

Here is the full paper.  And here is a recent paper by Howell, Hurwitz, and Smith, with related results.

The effect of district attourneys on criminal justice outcomes

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.