Economists in recent decades have turned their attention to data that asks people how happy or satisfied they are with their lives. Much of the early research concluded that the role of income in ...determining well-being was limited, and that only income relative to others was related to well-being. In this paper, we review the evidence to assess the importance of absolute and relative income in determining well-being. Our research suggests that absolute income plays a major role in determining well-being and that national comparisons offer little evidence to support theories of relative income. We find that well-being rises with income, whether we compare people in a single country and year, whether we look across countries, or whether we look at economic growth for a given country. Through these comparisons we show that richer people report higher well-being than poorer people; that people in richer countries, on average, experience greater well-being than people in poorer countries; and that economic growth and growth in well-being are clearly related. Moreover, the data show no evidence for a satiation point above which income and well-being are no longer related.
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CEKLJ, FFLJ, NUK, ODKLJ, PEFLJ, UPUK
Drug control policy can have unintended consequences by pushing existing users to alternative, possibly more dangerous substances. Policies that target only new users may therefore be especially ...promising. Using commercial insurance claims data, we provide the first evidence on a set of new policies intended to reduce opioid initiation in the form of limits on initial prescription length. We also provide the first evidence on the impact of must-access prescription drug monitoring programs (MA-PDMPs), laws that do not target new users, on initial opioid use. Although initial limit policies reduce the average length of initial prescriptions, they do so primarily by raising the frequency of short prescriptions, resulting in increases in opioids dispensed to new users. In contrast, we find that MA-PDMPs reduce opioids dispensed to new users, even though they do not explicitly set out to do so. Neither policy significantly affects extreme use such as doctor shopping among new patients, because such behavior is very rare.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
Sacks discusses the state of health insurance marketplaces that is struggling to survive in times of difficult circumstances. The marketplaces may not survive if there is a self-sustaining increase ...in premiums that occurs as healthy people discontinue insurance coverage, driving up average costs of the insured and leading to further premium increases and coverage losses or so called death spiral. However, a closer look at the evidence suggests that the marketplaces are likely to survive. On average, premiums have increased substantially every year since 2016. The average premium of a midlevel plan nearly doubled in the last 4 years from about $220 per month in 2015 to about $400 in 2018.
Nonlinear cost-sharing in health insurance encourages intertemporal substitution because patients can reduce their out-of-pocket costs by concentrating spending in years when they hit the deductible. ...We develop a test for intertemporal substitution and apply it to data from the RAND Health Insurance Experiment, where people were randomly assigned either to a free care plan or to a cost-sharing plan which had coinsurance up to a maximum dollar expenditure (MDE). Hitting the MDE—leading to an effective price of zero—has a bigger effect on health care demand than does being in free care, because people who hit the MDE face low current prices but high future prices, and so stock up on health care. As a result, short-lasting price changes induce nearly twice as big a response as do long-lasting changes. These findings help reconcile disparate estimates of the price elasticity of demand for health care in the existing literature. Failing to account for intertemporal substitution can lead researchers to overstate cost savings from high deductible health plans by 20% or more.
•We develop a test for intertemporal substitution in health care demand.•We find evidence of intertemporal substitution using data from the RAND Health Insurance Experiment.•People respond much more to short-lasting price changes than to long-lasting ones.•These findings help reconcile disparate estimates of the price elasticity of health care demand.•Intertemporal substitution is an important part of the response to high deductible health plans.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
Cost-control incentives have become an important part of the health insurance landscape in the United States. These incentives are the strongest in capitated managed care organizations, especially ...HMOs, because such organizations are paid a fixed amount regardless of the spending they generate. Using a sample of insurance claims from about 500 plans, I find that in HMOs, spending on anti-cholesterol drugs is 19% lower than in other insurance plans. This spending difference could reflect the strong cost-control incentives generated by capitation, but it could also reflect the selection of healthy, price-sensitive patients into HMOs, or it could simply reflect lower prices. To understand the difference, I estimate a model of physician prescribing and patient refill decisions. Patients in HMOs are nearly twice as sensitive to copays as are other patients, consistent with selection of healthy patients into HMOs. Even after adjusting for this selection, however, HMO physicians remain highly sensitive to drug procurement costs. This high sensitivity explains about a 20% of the spending difference; combined with lower prices, it explains about 25–55% of the difference. I find no evidence that these spending reductions result in fewer patient refills or the prescribing of less effective statins.
•I study spending on statins in HMOs and other insurance plans.•HMOs spend 20 percent less on statins, and are much more likely to prescribe generics and preferred drugs.•Patients in HMOs are twice as copay sensitive as other patients.•Physicians in HMOs are uniquely sensitive to insurer drug procurement costs.•Differences in physician sensitivity explain 20-55 percent of the HMO spending difference.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
Abstract Measuring the prevalence of active SARS-CoV-2 infections in the general population is difficult because tests are conducted on a small and nonrandom segment of the population. However, ...hospitalized patients are tested at very high rates, even those admitted for non-COVID reasons. We show how to use information on testing of non-COVID hospitalized patients to obtain tight bounds on population prevalence, under conditions weaker than those usually used. We apply our approach to the population of test and hospitalization data for Indiana, and we validate our approach. Our bounds could be constructed at relatively low cost, and for other heavily tested populations.
Are teenage and adult smoking causally related? Recent anti‐tobacco policy is predicated on the assumption that preventing teenagers from smoking will ensure that fewer adults smoke, but direct ...evidence in support of this assumption is scant. Using data from three nationally representative sources and instrumenting for teenage smoking with cigarette taxes experienced at ages 14–17, we document a strong positive relationship between teenage and adult smoking: deterring 10 teenagers from smoking through raising cigarette taxes roughly translates into 5 fewer adult smokers. We conclude that efforts to reduce teenage smoking can have long‐lasting consequences on smoking participation and, presumably, health.
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BFBNIB, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
•We explore the effects of cigarette taxes experienced as a teenager, which are arguably exogenous, on adult smoking participation and mortality.•A one-dollar increase in cigarette taxes experienced ...at ages 14–17 is associated with an 8 percent reduction in adult smoking participation and a 4 percent reduction in mortality.•Mortality effects are most pronounced for heart disease and lung cancer.
Medical experts have argued forcefully that using cigarettes harms health, prompting the adoption of myriad anti-smoking policies. The association between smoking and mortality may, however, be influenced by unobserved factors, making it difficult to discern the underlying long-term causal relationship. In this study, we explore the effects of cigarette taxes experienced as a teenager, which are arguably exogenous, on adult smoking participation and mortality. A one-dollar increase in cigarette taxes experienced at ages 14–17 is associated with an 8 percent reduction in adult smoking participation and a 4 percent reduction in mortality. Mortality effects are most pronounced for heart disease and lung cancer.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
Recent research shows prices are insensitive to local demand conditions because national chains charge geographically uniform prices. We examine the price response to local cost shocks, including 68 ...excise tax changes, 76 sales tax changes, and other geographically based cost differences, using data on 35,151 retail stores in 96 multi-state chains. We find local cost shocks are passed through to local prices, with no spillovers to unaffected stores in otherwise affected chains, and at similar rates for national and local chains. Firms adjust local prices according to local cost changes, suggesting retailers respond asymmetrically to local cost and demand shocks. (JEL D22, D40, H22, H25, H71, L10, L81)
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CEKLJ, IZUM, KILJ, NUK, PILJ, SAZU, UL, UM, UPUK
With the passage of the American Recovery Plan Act of 2021, roughly 12 million Americans are eligible to purchase zero-premium Health Insurance Marketplace plans. Millions more are eligible for ...generously subsidized health plans with small, positive premiums. What difference does a premium of zero make, relative to a slightly positive premium? Using a regression discontinuity design and administrative data from Colorado, we find that zero-premium plans increase coverage, primarily by helping low-income households begin coverage sooner. The main mechanism is eliminating the transaction costs of having to make on-time payments to begin coverage. Transaction costs may be a meaningful barrier to subsidized insurance coverage take-up, particularly for low-income families.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
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