Knowledge that Transforms

We study the effectiveness of pay-and-chase lawsuits and upfront regulations for combating health care fraud. Between 2003 and 2017, Medicare spent $7.7 billion on 37.5 million regularly scheduled ambulance rides for patients traveling to and from dialysis facilities even though many did not satisfy Medicare's criteria for receiving reimbursements. Using an identification strategy based on the staggered timing of regulations and lawsuits across the US, we find that adding a prior authorization requirement for ambulance reimbursements reduced spending much more than pursuing criminal and civil litigation did on their own. We find no evidence that prior authorization affected patients' health.

We analyze the contribution of legal status incentives on the marriage choices of natives and migrants. Access to legal status reduces the probability of immigrants intermarrying with natives by 40% and increases the hazard rate of separation for intermarriages by 20%. We develop and estimate a multidimensional equilibrium model of marriage, fertility, and separation, where individuals match on observed and unobserved characteristics. Allowing for trade-offs between cultural distance, legal status, and other socioeconomic spousal characteristics, we quantify the role of legal status and the strength of cultural preferences and evaluate the welfare consequences of granting legal status to immigrants.

For governments procuring innovation, one choice is whether to specify desired products (a "Conventional" approach) or allow firms to suggest ideas (an "Open" approach). Using a U.S. Air Force R&D grant program, where Open and Conventional competitions were held simultaneously, we find that Open awards increase both commercial innovation and technology adoption by the military. In contrast, Conventional awards have no positive technology effects, but do create more program lock-in. The Open program attracts new types of applicants (e.g. start-ups), but openness also has a differential impact beyond inducing selection. These results suggest benefits from open approaches to innovation procurement.

Positive assortative matching refers to the tendency of individuals with similar characteristics to form partnerships. Measuring the extent to which assortative matching differs between two economies is challenging when the marginal distributions of the characteristic along which sorting takes place (e.g., education) change for either or both sexes. We show how the use of different measures can generate different conclusions. We provide axiomatic characterization for measures such as the odds ratio, normalized trace, and likelihood ratio, and provide a structural economic interpretation of the odds ratio. We then use our approach to consider how marital sorting by education changed between the 1950s and the 1970s cohort, for which both educational attainment and returns in the labor market changed substantially.